The UK appears to be going from strength to strength following the Brexit vote, will today's Markit PMI follow suit?
The UK consumer confidence rose for the first time since the UK’s vote to leave the EU according to a report from the GFK Group. Whilst the figure still signals an economic downturn since the fallout from the EU, this is the best reading that the UK has had since June with the reasons for the rise in consumer confidence being a mixture of ‘encouraging’ economic data, low interest rates and high levels of employment within the UK all being attributed.
This helped the Pound rise to above 1.18, which presented the best opportunity for any clients buying Euros with Sterling for nearly a month.
This was welcome news, on Tuesday the mortgage approval rate in the UK fell to its lowest in a year and a half. The number of mortgages being approved has slowly been declining since March. However, I personally believe that this was due to a change in taxes, brought in on April 1st and the Brexit, for once cannot be held responsible.
In what has been billed the most important meeting since the June decision, Theresa May held talks yesterday with her cabinet amidst fears that there were growing tensions and priorities concerned with those leading the Brexit. Theresa May added that the UK must focus on ‘opportunities outside of the EU’ and that talks with the rest of the EU will not be happening this year. For clients, this could mean that we are now entering a volatile period. Theresa May has stuck to her guns this far, and seems as though the likelihood of a hard Brexit is more likely. Stepping out into the unknown was last seen only recently in our vote to leave the EU, as we negotiate new deals who knows what opportunities lie ahead for the UK. In my opinion, I would expect Sterling to weaken as the UK looks for new trade deals or opportunities in the coming months.
Closer to home, today we have Markit Manufacturing PMI and tomorrow Construction PMI. The reports will give us an insight into the manufacturing sector and construction or building sector in the UK for the month of August. The expectation is for a slight increase in both sectors however investors cannot be sure as the data from the Brexit trickles into the data releases. For complete clarity, I would suggest speaking to your account manager if you have a transfer to make this week.
Whilst it does appear that the UK economy is shrugging off Brexit, there remains much uncertainty ahead. Clients who are looking to buy foreign currency should get in touch with us to discuss your requirements. Our trading floor number is 01494 725 353.
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