Yesterday trading in most sterling cross rates developed in thin market conditions.

Today’s trading will mark the ‘real’ start for trading on the exchange rate markets in 2012.

Contrary to what is the case for EUR/USD, EUR/GBP is hardly profiting from the improvement in global sentiment on risk in Asia this morning. The pound to euro exchange rate is currently at 1.1964.

Today, the UK PMI of the manufacturing sector will be the first important data series.

The consensus expects a further decline into contraction territory.

"We put the risk for a slightly better than expected report. During the month of December, the EUR/GBP cross rate joined the broader market repositioning out of the euro," says an exchange rate note from KBC Markets.

Investors apparently wanted to reduce overall euro exposure going into the end of the year and this move was also visible in the EUR/GBP cross rate going forward say KBC.

The ample liquidity providing by the ECB might have been a negative for the single currency, too.

Investors are also taking into account that the ECB will keep monetary policy extremely loose in the foreseeable future and that even further policy easing is still possible.

The poor eco outlook and the uncertainty on the solution to the debt crisis caused the euro to loose its advantage over the UK currency.

"We are no big supporters of the UK currency being a potential save haven in case of market turbulence. That said, we can not ignore the decent performance of the UK currency versus the euro at the end of last year. So, we don’t row against the tide yet," say KBC Markets.