The UK manufacturing sector continued its solid start to the year, despite falling to a three-month low in February, figures showed yesterday.
Markit's manufacturing PMI fell to 54.6 in February, down from 55.9 in January. As any number above 50 on the index indicates growth, this is still a solid number despite missing analysts' expectations of 55.6. The main reason for the growth was "solid growth of production and new orders during February", bearing in mind that the figure was well above the sector's long-term average of 51.6. While the weaker Pound is boosting demand for UK products, input costs have also risen and this limits the extent to which many exporters are able to pass on the benefits.
Yesterday, the House of Lords held its second day of detailed debate on legislation which would give Prime Minister Theresa May the power to begin divorce talks, as she plans to do by the end of March.
Opposition parties in the Lords, where the ruling Conservatives do not have a majority, say they have enough support to pass an amendment to the legislation to include a guarantee on the post-Brexit rights of EU citizens currently living in Britain. Ministers say that the status of EU residents will be a priority once Brexit talks begin, but opposition peers want a unilateral guarantee about their right to stay.
Any changes made in the Lords would need to be approved by the lower house, the House of Commons, which last month passed the legislation without attaching any conditions, and this may prolong a process May has indicated she wants completed quickly.
Investors increasingly believe that a U.S. interest rate hike will come sooner rather than later, with a 66.4% probability of a March hike now priced in. In a strong signal, one of the most influential U.S. central bankers, New York Fed President William Dudley said this week that the case for tightening monetary policy had become "a lot more compelling", while San Francisco Fed President John Williams said he saw "no need to delay" raising rates. These comments have overshadowed President Donald Trump's Tuesday night speech to Congress.
French stocks were boosted after controversial right-wing French presidential candidate Francois Fillon confirmed that he intends to remain in the race. The decision could strengthen the position of centrist Emmanuel Macron - who, polls show, would beat far-right anti-EU leader Marine Le Pen.
09:30 – GBP - Construction PMI, expected to remain the unchanged at 52.2
13:30 – USD - Unemployment Claims, expected at 243K against a previous 244K