Pound at five-year high as CBI reports best order book results

STERLING pushed above $1.704 yesterday, breaking into territory last seen before the full weight of the financial crisis hit in October 2008.

The pound’s rise came as the Confederation of British Industry (CBI) reported that manufacturers’ order books were in their best state so far in 2014.

Sterling’s surge against the dollar also followed comments yesterday that a UK rate hike might come sooner than expected, as well as the Federal Reserve’s announcement on its $10bn (£5.87bn) a month reduction in its bond buying plan. The Fed also made doveish noises about interest rates and positive comments about the US economy.

Meanwhile, the CBI said that 34 per cent of the UK’s industrial firms recorded above-average order books this month, while only 23 per cent said they were below average. The net balance of 11 per cent is the best result so far in 2014.

A net balance of 17 per cent of firms said their volume of output had risen in the past three months, far more than the long-term average of two per cent.