Manufacturing activity in the U.K. decreased less than expected in May, easing concern over the British economy, industry data showed on Thursday.
In a report, market research group Markit said that its U.K. manufacturing PMI fell to a seasonally adjusted 56.7 last month from a reading of 57.3 in April.
Analysts had expected the PMI to decline to 56.5.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
Markit considered the headline reading to be a further sign of "marked growth" and noted that output and new order growth remained solid, while the rate of job creations was at a 35-month high.
"The strong PMI numbers suggest the manufacturing sector has gained growth momentum in the second quarter after the sluggish start of the year," Rob Dobson, senior economist at survey compiler Markit, said.
"The ongoing strength of the domestic market remains the main driver of the upturn," he added.
Immediately after the report, the pound was off the day's lows, though mounting political uncertainty in Britain continued to weigh. GBP/USD was trading at 1.2875 from around 1.2874 ahead of the release of the data, EUR/GBP was at 0.8718 compared to 0.8722 prior to the report, and GBP/JPY traded at 143.08 compared to 143.04 earlier.
Meanwhile, European stock markets were trading higher. London's FTSE 100 rose 0.36%, the Euro Stoxx 50 gained 0.27%, France's CAC 40 advanced 0.72%, while Germany's DAX traded up 0.42%.