James Smith, Developed Markets Economist at ING, points out that the latest UK services PMI has beaten expectations and at 55.1, it now stands at the highest level since October, and despite the ongoing uncertainty surrounding Brexit, new orders are rising at the fastest rate in over a year too.
Key Quotes
“This, much like the recent data emerging from the retail sector, suggests that the economy is having a better ride in the second quarter than in the first – and for the Bank of England, this will be put a fairly big tick in the August rate hike box.”
“Barring a sudden and consistent downtrend in the data flow, we think an August rate hike remains likely.”
“Brexit has the potential to get increasingly noisy as we head into the Autumn, while the fundamental challenges facing the retail sector haven’t disappeared.”
“We therefore still have our doubts the Bank will raise rates more than once this year.”
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