020 7898 0500The British pound has been resilient this week gaining slightly against the euro and US dollar despite cracks appearing in the once-robust post-referendum economy. The week started with political focus returning as the House of Lords discussed whether to approve the Brexit bill. Also in Westminster, Bank of England (BoE) governor Mark Carney testified before the Treasury Select Committee. In testy exchanges and in stark contrast to the dire warnings he issued before the referendum, Mr Carney acknowledged that the UK’s divorce from the European Union (EU) may yet proceed smoothly. This would open a path for higher interest rates.
In terms of economic data, the second reading of the final quarter of Gross Domestic Product (GDP) was revised upwards to 0.7% from 0.6%. Another key piece of economic data was released in the form of the business investment figure. Unlike GDP, which is backward looking, business investment is forward looking in terms of the effect on the economy. This number fell by 1% against an expectation that it would hold at a constant level, after the previous reading was revised downwards.
It is a quiet end to the week today, but next week we have the key Purchasing Managers Index (PMI) for the manufacturing, construction and all-important service sectors.
