The pound had a bad start to the week with the manufacturing PMI coming in less than expected, showing a reading of 52.0 against a 52.5 consensus. Following the reduced growth figures last week, the outlook for the UK economy still remains positive but recent data shows the outlook is not as positive as analysts had hoped for.
A UK Manufacturers group (EEF), lowered their 2015 manufacturing output growth forecast to 1.5% from 1.7%. The pound yesterday lost ground against all of its major counterparts, with GBP/USD now falling for 7 days in a row, dropping a total of 485 points (3.1%).
The USD once again continued its strong trend yesterday as we headed into the afternoon session. ISM manufacturing PMI coming in at 52.8 against a 52.0 consensus. This is the first time that the ISM manufacturing has beaten the month-on-month consensus since December 2014, and with the Markit manufacturing coming in at 54 from a preliminary 53.8, the signs are that manufacturing in the US is making firm progress. Other pieces of note saw the personal income figure in at 0.4% against a 0.3% consensus, and the personal spending coming in flat at 0%. USD index has showed an increase of 0.7% yesterday, which is in fact the 5th consecutive day of gains for the index. Fed Vice Chair Stanley Fischer also spoke yesterday, outlining that the central bank’s research said there wouldn’t be much difference between moving earlier for a hike vs moving later. After positive jobs and wage data in the last month combined with a slow recovery in inflation, Mitsubishi UFJ Financial Group forecast that the Fed will announce a rate hike at their June 17th meeting,
Yesterdays data showed euro-zone manufacturing PMI still above the 50 mark, coming in at 52.2 against a 53.3 consensus. However the German manufacturing PMI being the largest disappointment, coming in at 51.1 against a 51.4 consensus. This is a 0.3 reduction from the preliminary figure of 51.4 two weeks ago, however positive CPI figures did not create any concern.
There wasn’t much concrete information surrounding Greece yesterday, however rumours of them missing their EUR300m IMF payment on Friday were still circulating. Reports were circulating yesterday that a deal would be announced between Greece and the Eurogroup, however this failed to materialise. Sources reported that EU officials are going to meet to discuss potential arrangements and further plans for Greece in Berlin and present in the coming days.
09:30 – GBP – Construction PMI is forecast to increase
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