Manufacturing activity in the UK rose in April at the fastest pace in three years, continuing with the fears about the Brexit effects to the British economy. The companies increased output due to the weak Pound that revived the country’s export sector and the domestic market growth, thanks to the accelerated inflation. Amid headline PMI readings of 57.3 points, the economists’ forecast of 54.0 points looked rather pessimistic, predicting a moderate expansion of the sector.
PMI data is very important for both suppliers and producers. They are necessary for assessing the economic situation in the country for both executive managers and analysts, and for the heads of purchasing departments. The report includes five indicators – new orders, inventory levels, production, suppliers’ delivery and employment environment, thus combining the leading data and coinciding with the GDP trend.
The report managed to get the Pound out of the red territory, making it ready to head for 1.30 level. Despite the fact that, Brexit contains a lot of uncertainty as for the data on inflation, consumer spending and PMI, consistently point to the sustainability of the economic growth, which would force the Bank of England to consider raising rates at the next meeting. In the last meeting, the Central Bank left the rates unchanged, but one of voting participants called for a future rate increase, which returned bets on the hedge funds Pound rally.
The Dollar trades with minor changes, waiting for the FED’s decision on the interest rates. The probability of an increase is very small, but the markets will carefully analyse the officials’ statement about the potential rate hike at the next meeting in June. Before the meeting of the Federal Reserve, some investors will probably cut their exposure to the Dollar, which may lead to declines of the currency, but its further dynamics depend on how hawkish the FED tone will be.
Defensive assets keep slumping, as Macron’s victory in the French elections is becoming more likely, Gold and Yen are reverting downturn before uncertainty related to the US Central Bank’s rate hike decision. European stocks post moderate gains.
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