06/12/16 - UK Services Remains Resilient

GBP

British Services PMI improved to 55.2 points, surprising markets to the upside for the month of November, a fresh report from Markit Economics showed on Monday. Markets had predicted a drop to 54.2.

 
The figures suggest that the UK economy will continue to defy the negative post-Brexit forecasts. The Index remained above 50.0 for the fourth consecutive month, which indicates a continuing recovery in growth following a contraction in July which was linked to the UK Referendum.

 

Markit said that despite a drop in the equivalent survey of manufacturers published last week, the PMI figures suggest the UK economy will maintain the third quarter's 0.5% growth rate through to the end of the year.

USD 

New York Fed President William Dudley  said yesterday that Donald Trump’s election victory has created "considerable" uncertainty over the policies he will pursue, and so it is too soon for the Federal Reserve to judge whether its plan for gradual interest rate hikes needs adjusting.

 

"Assuming the economy stays on this trajectory, I would favour making monetary policy somewhat less accommodative over time by gradually pushing up the level of short-term interest rates," said Dudley, a permanent voter on monetary policy and a close ally of Fed Chair Janet Yellen.

EUR

The Euro rose against the dollar, despite Italy sliding into uncertain territory after Italian Prime Minister Matteo Renzi’s resignation opened the door to fresh elections. Earlier, the Euro fell to its weakest level in 20 months. European shares gained the most in three weeks, while the cost of insuring Italian bank bonds against default rose.
 

OIL

Brent crude oil advanced to a 16-month high, above $55 a barrel, as oil traders continued to celebrate Opec's agreement, after long delays, to put a cap on production. OPEC invited non-members to Vienna, in an effort to secure further output cuts following last week’s landmark deal to cut production by 1.2m barrels a day.
 
This is the first cut to be agreed by members, who have been arguing over a potential cut since oil prices first began drastically falling in mid-2014.

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