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According to Jacqui Douglas, Chief European Macro Strategist at TD Securities (TDS), the bounce in the January UK PMIs was stronger than expected for both manufacturing and services, leaving next week’s BoE rate decision as a real toss-up.

Key Quotes:

“This morning’s PMI data surprised to the upside, with the manufacturing PMI rising to 49.8, its strongest level since April, and the services PMI recording a solid jump to 52.9, its highest level since September 2018.”

“The nearly 3pt gain in the services PMI was its largest m/m jump since the post-referendum rebound in August 2016, which had followed a nearly equally-large decline in July 2016. The details of the survey were upbeat as well, most notably with business optimism hitting its highest level since June 2015, a year before the EU referendum.”

“We maintain our call for a 25bps rate cut next week, but believe that the odds of that cut are close to 50%. It will almost certainly be a fairly split vote either way, as MPC members put differing weights on the hard data versus the survey data.”