The pound fell sharply yesterday morning after figures showed British private sector momentum had slowed much more than expected, adding to recession concerns as inflationary pressures soared. This indicates an increased risk of the economy sliding into recession as the Bank of England struggles to control inflation. We saw GBP/USD drop 0.7% immediately after the news.
S&P Global’s Composite Purchasing Managers’ Index (PMI) flash survey showed growing pessimism in services and manufacturing after the figure fell to 51.8 in May from 57.6 in April, its lowest level since February last year. The reading was worse than any forecast in a Reuters poll of economists, which had indicated a drop to 57.0, and the depth of the fall was greater than anything seen before COVID. So far, most surveys of UK business activity have been quite robust, despite record high consumer confidence after inflation hit a 40-year high of 9%.
Have a nice day.
Author: William Jones, Senior Relationship Manager.
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