020 7898 0500An August rate hike looks increasingly likely now, given the PMI data releases this week. First up was construction, which came in better than expected and hit a seven-month high and then came yesterday’s services PMI which showed the strongest pace of expansion since October 2017. There is mounting evidence that UK economic growth is accelerating which could see the Bank of England tighten monetary policy at an accelerated rate. While it is important to not get too far ahead of ourselves, recent signs are certainly encouraging.
The pound started the day by weakening a little against the dollar, but following the release of the services PMI reading, it climbed higher and ended the day strengthening against the dollar and euro. As it stands, there is more than a 60% chance of rates being hiked in August and, were that to happen, we could see some significant sterling strengthening.
Today we will see new car sales for June and BoE Governor Mark Carney is due to deliver a speech at 11am. On Friday, we will see the Halifax house price index for June, as well as the final labour productivity figures for the first quarter of 2018.
