The daylight savings on the weekend officially brings to an end British Summer Time, but the question remains: ‘Is there light at the end of the tunnel’? In the early hours of Friday the tunnel was still looking very dark and long. The GFK consumer sentiment reading for the UK slipped further to a level of minus 3. It’s not hard to see why confidence is ebbing away when reviewing the situation. Inflation is pushing higher, debate surrounding the conditions of Brexit continues to be uncertain, and everyday there are negative connotations within the press. Based on this it is easy to see why the light at the end of the tunnel is dim.
The Brexit squeeze on UK consumers tightened on Friday as Apple Inc. and Electrolux AB responded to the falling pound by charging more for their products in Britain. Apple quietly raised the cost of some of its machines including the Mac Pro by 20% overnight. This really feels like a sign of things to come. Since the ‘Marmite Wars’ it has been common to see news on recent price hikes. This is surely going to dent confidence moving forward.
The week ahead could be volatile due to the events and data on the calendar. All three Purchasing Managers’ Indices (PMIs) are set for release: manufacturing on Tuesday, construction on Wednesday and the highly anticipated services on Thursday.
In addition, the quarterly inflation report is due on Thursday. This provides the Bank of England (BOE)’s projection for inflation and economic growth over the next two years. BoE Governor Carney will also hold a press conference to discuss the report’s contents after release. With all the price hikes being discussed from overseas businesses it will be interesting to judge the tone that the Governor will take. However, the market could also be keeping an eye on the US Presidential elections, which are just round the corner.