UK PMI: Big rebound should keep Bank of England on hold – Nordea

Morten Lund, Analyst at Nordea Markets, offered his view on the latest UK PMI figures and expect that the Bank of England will be on hold next week.

Key Quotes:

“Both Manufacturing and Services increased, with the latter bouncing the most. This should be comforting news as the service sector is by far the biggest in the UK. Moreover, forward-looking indicators such as New Orders improved significantly.”

“We think a reading of 52.0 was needed to keep the BoE firmly on hold. With today’s numbers now showing an even bigger rebound, we stick to our forecast of the BoE being on hold at Governor Carney’s last meeting.”

“With that said next week’s meeting will be a close call. Afterall, when the Bank comes out as dovish as the MPC members have been in the past weeks, there is usually “something about it”. Markets now price in roughly a 45% probability of a rate cut next week.”