020 7898 0500The first of the three Purchasing Managers’ Indices (PMIs) for the UK was released yesterday, from the manufacturing sector. The figure, which shows the pace of expansion, dropped from the previous month’s, but posted a number close to the expected figure, which was healthy. The health of the sector is due largely to the weaker pound sterling; however, the fall in sterling has also had a marked impact, with costs of imported goods rising. Markit, a research organisation, stated that, of the surveyed businesses, about 90% of companies reporting rising import costs attributed this to the weaker pound.
Data from Bloomberg has highlighted that sterling was the worst-performing currency in the month of October, behind 150 peers. The fall is largely due to the prospects of a hard Brexit looming on the horizon. The debate on whether the UK’s access to Europe’s single market is sacrificed for immigration controls will continue and until a clear, defined path is laid; sterling is likely to remain weak as the currency markets hate uncertainty.
Instead, much of today’s focus will be on the US Federal Open Market Committee (FOMC) meeting and statement, which are due for release this evening. The market will decipher the statement for changes in the forecast and estimates. In addition, the statement will be scrutinised for clues on a potential rate hike in December.
