UK: Faltering activity? - Westpac

Although UK’s labour data remains positive, with the employment rate reaching a record level (75.6%, unemployment rate of 4.2%), other data continues to show faltering activity, according to Tim Riddell, Research Analyst at Westpac.

Key Quotes

“The latest BoE Agents’ Report did show positives for manufacturing and exports. However, the retail & services sectors (majority of the economy) are faltering and their investment intentions are stalling while turnover and values are slumping in early Q2 18. CBI trends, inflation and retail sales releases next week are now of increasing interest.”

“Brexit concerns are mounting, not waning (cited a key problem in BoE Agents’ Report and MPC minutes). PM May is failing to unite her Cabinet, let alone Parliament, for credible customs and Irish border proposals. A proposed White Paper may assist, but divisions and political vulnerability remain in front of the late-June EU Leaders Summit.”

“Although USD is the main driver of the slide in GBP/USD, issues weighing on GBP are persisting. The low 1.30s remains a strong area of attraction for GBP/USD.”

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