Talking Points
- UK manufacturing in May grew at a slower rate than April but nudged ahead of expectations.
- GBP little moved as UK politics, opinion polls hold sway.
- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.
UK manufacturing put up another robust performance in May, following April’s strong showing, giving hope that Q2 GDP may pick-up from the poor 0.2% growth seen in the first quarter of the year. The Markit manufacturing PMI came in at 56.7, beating expectations of 56.5, but down on April’s 3-year high figure of 57.3.
Manufacturing production and new orders both expanded at above survey average rates, while companies benefited most from the continued strength of the domestic market. There was also a solid increase in new export business as well, the data revealed.
Rob Dobson, senior economist at IHS Markit, said, “The strong PMI numbers suggest the manufacturing sector has gained growth momentum in the second quarter after the sluggish start of the year. The ongoing strength of the domestic market remains the main driver of the upturn. Growth of new export business played a lesser role in comparison, with the trend in foreign demand continuing to improve only in fits and starts, despite the assistance of a historically weak sterling exchange rate.”
GBP traded little changed after the release with traders looking at the recent UK voting intention polls with the General election now just one week away. A YouGov poll out Wednesday showed the gap between the two major parties narrowing to just 5%, while others show the ruling Conservative party with a double-digit lead.
Chart: GBPUSD Five Minute Timeframe (June1, 2017)
--- Written by Nick Cawley, Analyst
To contact Nick, email him at nicholas.cawley@ig.com
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