U.K. factories saw costs rise at a record pace at the start of 2017, reflecting the pound’s drop since the Brexit vote and an increase in oil prices. While the weaker currency continues to squeeze manufacturers, the positive impact on exports appears to be diminishing. In its monthly Purchasing Managers Index, IHS Markit said there were signs that the exchange rate boost was “waning,” and growth in new overseas business slowed sharply in January. Nevertheless, the report painted a generally positive picture, with Markit’s headline activity index at 55.9, comfortably above the key 50 level that divides expansion from contraction. A measure of output rose to the highest in almost three years. The pound’s impact on prices is a potential hurdle for the U.K. economy in 2016. As inflation accelerates, that could put the brakes on consumer spending, one of the main drivers of expansion in recent years. The pass-through from the exchange rate is also an issue for the Bank of England, which will publish new forecasts for growth and inflation on Thursday alongside its latest policy decision. “The question is whether increased cost inflationary pressure will act as a drag on manufacturing growth going forward,” said Rob Dobson, an economist at Markit in London. He added that companies seem “fairly sanguine,” with a gauge of business confidence at an eight-month high, and said manufacturing could be a “solid” boost growth this quarter.