A busy week ahead for the Pound with Markit, Construction and Manufacturing PMI due to be released on Wednesday, Thursday and Friday. Yet another opportunity for British exports to shine off the back of a weaker Sterling.
Just one example of many that highlights the defiance of the UK economy since June, Manufacturing PMI for the most part, has continued to outperform predictions despite stark warnings that the vote in June would rip shock waves through the economy.
None of which did, or currently does appear to be materialising. The Bank of England’s decision last year to cut interest rates and boost Quantitive Easing has for the most part, kept the economy afloat so to speak. Mark Carney – Governor of the Bank of England has revised growth forecasts for the UK in light of the ongoing resilience to the Brexit vote, which could bring with it positive news for the Pound.
Inflation remains a concern for the Bank of England, as prices continue to rise as a direct result of a weaker Sterling, the BoE may have to offset higher inflation by increasing interest rates, a move that is likely to strengthen the Pound’s position but weaken consumer spending for the foreseeable.
What can we take away from Thursday’s inflationary report and consecutive interest rate decision? With growth forecasts expected to rise coupled with the UK’s resilience to the Brexit vote, Carney will likely remain neutral to the longer term implications of the vote, but remain relatively bullish about the short term outlook.
Whilst this may provide some short term spikes for the Pound, Theresa May’s announcement of the Article 50 deadline on March 9th could offset positive gains.