BOE In Focus
The latest round of UK data released today has thrown a spanner in the works once again for those attempting to gauge the BOE’s next steps. The October flash services and manufacturing PMIs were both projected to have fallen back over the prior month as a result of the supply chain issues and energy crises gripping the nation (and the world). On the back of a weaker set of September inflation figures, a set of soft PMIs today would have surely rung the death knell for a rate hike ahead of year end. However, with both sets surprising to the upside, GBO has thrown its hat back in the ring.
UK Factory Sector Grows
The UK October manufacturing PMI came in at 57.7, rising on the prior month’s 57.1 reading and beating expectations for a drop down to 56.1. Looking at the breakdown of the data, the increase was fuelled by solid growth in new orders and employment growth. However, the data also showed that production growth was stalling as a result of staff and materials shortages, suggesting a forthcoming slowdown unless conditions resolve. Indeed, input cost inflation was seen rising to four month highs as a result of the energy crisis and increased freight costs. Of particular note was the comments made by many manufacturers that they were struggling to satisfy consumer demand currently.
Record Services Sector Growth
Along with the rise in the factory sector, services sector growth was seen rising at its faster level since May to 58 from the prior month’s 55.4, well above the forecasted drop to 54.5. This latest increase means the gap between the services growth and factory growth is at its highest level since 2009. Those taking part in the survey note that consumer spending had risen as a result of lockdown restrictions loosening and vaccination confidence growing.As with the manufacturing data, however, staff shortages and supply chain issues were noted as the two biggest headwinds.
Technical Views
GBPJPY
The rally in GBPJPY has seen price breaking out above the 156.06 highs with rice currently stalling into a test of the 157.88 level resistance. With both the MACD and RSI bullish here, and the retail market holding plenty of short positions, the focus is on a continued push higher while price holds above the 156.06 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.