London — The pound sterling has cut off some of its decline against the euro and the dollar on Thursday after the UK’s PMI was higher than expected in June, but the pound is vulnerable to political risks and fears of a recession. I’m sorry.
The PMI’s Interim Comprehensive Index, held at 53.1 in June, surpassed the median forecast of 52.6 in the Reuters economist poll and has not changed since May.
The pound fell 0.5% against the dollar’s appreciation of $ 1.2208 and was previously below $ 1.22.
The pound sterling rose 0.1% on the day at 85.98p against the euro, hitting a week-long low earlier.
Francesco Pesole, FX Strategist at ING, said:
“This, in part and temporarily, eases market concerns about the UK’s economic outlook, supports the current aggressive Bank of England interest rate pricing, and ultimately keeps the euro / pound sterling below 86.00. It may help, “he said.
The BoE raised its benchmark interest rate by 25 bps to 1.25% on June 16 if it is necessary to eradicate the risk of inflation, even though rising borrowing costs could have a further negative impact on the economy. Said he was ready to act “powerfully”.
Investors were also looking at further signs of political instability as the ruling Conservatives were vying for two major by-elections on Thursday. One is Tiberton and Honiton in the southwest, and the other is Wakefield in the north. Defeats in either location could spur Conservative lawmakers to find a way to expel Prime Minister Boris Johnson.
Jane Foley, Head of FX Strategy at Rabobank in London, said:
“Therefore, they can help remind us of the distractions caused by the actions of officials of various political parties, which is a negative factor for investment confidence and the pound.”
Meanwhile, the surge in debt and interest costs caused by the surge in inflation forced the UK government to borrow more than expected £ 14 billion ($ 17.14 billion) in May, according to official data released Thursday. I did. ..
This week, the strike crippled Britain’s rail network as trade union bosses, train operators, and the government faced demands that raising workers’ wages catch up with the surge in inflation.
Soaring food prices pushed UK consumer inflation to a 40-year high of 9.1% in May, according to Wednesday data.
(Report by Joyce Alves, edited by Mark Heinrich)
Sterling trims some drops after better than expected PMI data
https://financialpost.com/pmn/business-pmn/sterling-trims-some-declines-after-better-than-expected-pmi-data Sterling trims some drops after better than expected PMI data