Pound Sterling fell at the start of the trading session, before climbing back into mid 18 ranges following a surge in Manufacturing PMI data released at 09:30. The figures, which came in at 57.3 are the strongest figures since 2014 but have raised some questions for businesses.
Demand for UK goods remains up due in most part to a weaker Pound, but how long can businesses maintain current levels of supply and demand?
IHS Markit who release the PMI figures stated that “such a pace that suppliers are struggling to keep up with demand”.
Markets welcomed the news but remain sceptical towards longer term growth within the UK. The Pound has struggled to break through the 1.184 mark at the time of writing.
EU Commissioner Jean Claude Juncker labels Theresa May delusional
Following a dinner briefing last Wednesday reports have come in that Juncker walked away labeling the Prime Minister delusional and living in a ‘galaxy far away’. The report have surfaced amid concerns that PM May requested a trade deal to be struck prior to Article 50 ‘stuff’.
In yet another sign that EU members are toughening their stance on Brexit, the Prime Minister has been reminded once again that the Brexit bill must be settled before trade negotiations commence.
Economic data this week
The latest Construction PMI figures will be released at 9:30am and are expected to show a small decline from March. Consumer credit on Thursday is also expected to show a sharp decline, with the latest Retail sales following the negative trend. Are these signs that consumer spending is beginning to falter?
Mortgage approvals are also expected to decline MoM and it will be interested to see whether a fall in consumer credit is having an impact on the Housing market.
In March the Bank of England reported that consumers were using credit cards to keep spending which casts doubts on whether consumers can afford new mortgages.
I do not envisage much movement for the Pound this week, but with the French elections now less than away GBP/EUR may edge closer to 1.19. However I expect these gains to be short lived given the Brexit negotiations that will follow shortly after.