The British pound received a lift in the overnight session following a slower than anticipated contraction for the UK manufacturing sector.  The positive results helped to spark a 0.91% daily gain in the British currency against the US dollar – which is now trading at 1.5655.

According to results from a joint manufacturing report published by Markit Economics and the Chartered Institute of Purchasing and Supply, UK manufacturing readings improved to an index mark of 49.6 in the month of December.  The figure was far better than November’s 47.7 and is indicative that the UK economy may be on the mend.  For the fourth quarter, the index averaged final readings that were the lowest in two years according to the report.  Readings below 50 are reflective of a contractionary environment.

Boosting the slightly optimistic results was a jump in new export subcomponent numbers as demand picked up in Germany and China during the month.  Previous demand from these two economies have dimmed recently in light of the global slowdown and concern regarding the European Union’s near term future.

Incidentally, the report is also helping to inject some positive vibe into the first session of the new year as the findings counter previously pessimistic UK data announced yesterday.  According to a business confidence report published by a unit of Lloyds Banking Group, sentiment had plunged to a 3-year low in December – increasing the likelihood that the UK economy will continue to contract in the first quarter 2012.