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Weekly roundup: GBP unsteady as December PMIs leave doubts over impact of Brexit on UK economy

currency-newsWeekly roundup: GBP unsteady as December PMIs leave doubts over impact of Brexit on UK economy
The final set of UK PMIs for 2017 left the pound on volatile form by raising questions about the health of the UK economy heading into the New Year.

Although markets were first disconcerted by an above-forecast drop in the UK’s latest manufacturing PMI on Tuesday, Sterling quickly recovered after analysts pointed out that the index remained firmly in growth territory at 56.3 points. This means the average PMI reading for the final quarter of 2017 clocked in at a respectable 57 points.

Pound exchange rates started Wednesday on the advance as well, even though the construction PMI also fell further-than-expected; though demand for house building remained robust, civil engineering and commercial building projects continued to dry up, as Brexit cast a shadow on the UK’s economic outlook.

Sterling began to weaken towards the end of the day, and this continued on Thursday, even though the UK services PMI rose above forecast from 53.8 to 54.2. Markets weren’t convinced that the data was as positive as the headline uptick suggested.

Despite a lack of impactful UK data on Friday, pound Sterling was able to end the week largely on the rise, thanks to weakness in the day’s Eurozone and US economic data. Despite this, Sterling still fell short of reclaiming the week’s highs.

After a quiet start to the week, the UK data calendar picks up on Wednesday, with a slew of eco-stats including industrial production, manufacturing production and construction output data, as well as the latest trade balance figures, all for November.

There will also be the latest estimate of GDP from the National Institute of Economic and Social Research (NIESR), this time covering the three month period to December.

There is only one release scheduled for publication on Thursday, but as this is the Bank of England’s (BoE) Credit Conditions and Bank Liabilities Survey results, it could be enough to cause plenty of GBP volatility on its own.
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