Brexit looks even worse than previously thought: the manufacturing sector was deeper in contraction territory in July: a score of 48.2 points instead of 49.1 reported earlier. While this is a small sector and services matter a lot more, the pressure remains high for BOE action on Thursday. This is the lowers read since February 2013. And the sector already feels the fall of the pound: input prices are the highest in 5 years.
GBP/USD wakes up and falls towards 1.32.
Among the components, new orders plunge from 56.3 in June to 48.3 in July.
The final manufacturing PMI for the month of July was expected to confirm the mild contraction reported in the special post-Brexit release. The score was 49.1, under the 50 point threshold that separates growth and contraction. Markit published a special report in response to requests for an updated picture after Brexit.
GBP/USD was trading steadily in range, around 1.3235.
Cable managed to climb higher thanks to the weakness of the US dollar. GDP growth was poor in the world’s largest economy. Together with a hesitant Fed decision, the greenback was under pressure last week.
The focus of this week is in the UK: the BOE makes its rate decision. A stimulus package is expected. MPC member Martin Weale was not convinced to ease. However, the weak preliminary PMIs changed his mind.
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