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Happy 4th July

Happy 4th July

UK PMI manufacturing eased back for a fifth consecutive month in June, when it surprised to the downside on Friday. This reading is a worry for UK policy makers, who, are hoping to rebalance the UK economy away from one reliant on consumer spending towards, one reliant on manufacturing and export driven growth. The progress made so far in this difficult rebalancing act appears to be limited.

However, one positive is that the UK is not alone in releasing poor manufacturing data, with, Chinese, Swiss and European data also coming in below expectations. This data hints towards a slowing down in the global economy which may lead to safe haven buying of the USD in a quiet day for data releases, due to the public holiday in the US.

Today, sees the release of UK PMI construction which is expected to drop back slightly in June to 53.7 from 54, this reading holds a risk to the down side however with the stagnant UK housing market and lack of public funds lending little support to growth in this sector.

Sterling has started to strengthen slightly this morning against both the Euro and USD. However, it remains at its lowest level since the 1

st Quarter of 2010 against the Euro and is hovering just below the 1.11 level at present. Looking to the week ahead I am expecting to see Sterling strengthen slightly against the Euro, but, this is based on the notion that it can’t weaken any further in the near term with the European rate hike having being fully priced in for Thursday 7th July.

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