UK Manufacturing Data Subdues Sterling Gains.

UK Manufacturing PMI released this morning showed the sector slowed at its fastest pace since July 2012. The seasonally adjusted IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index dropped to four-month lows of 47.4 in December versus 49.4 expected and November’s reading of 48.9. This reading has contributed to sterling retracing approximately 0.5% against both EUR and USD. With unemployment rates and consumer pricing data releases later this week the markets will watch to see if the general election lead increase to sterling will be short-lived.

Prime Minister Boris Johnson will address his new conservative MPs later today as they arrive in Westminster to take their seats in Parliament for the first time. The first job of the Tory majority government will be to vote on the Withdrawal Agreement Bill that the PM intends to bring back to the house before Christmas. The PM is also expected to lead a small reshuffle of his cabinet and he also needs to fill the positions made vacant by those MPs who stood down ahead of the general election.

After the Queen formally opens Parliament on Thursday, setting out the governments legislative program, it is thought the Withdrawal Agreement Bill could be put before MPs as early as Friday. With Johnson’s greatly increased majority the bill is expected to pass through Parliament in time to meet his promise for the UK to leave the EU on 31st January.

Rightmove has predicted that the price of property coming to market in Britain will rise by 2% next year. The property portal has suggested that the lack of confidence by homeowners driven by political uncertainty since 2016 has kept prices subdued. With the new Conservative majority there is an opportunity to release pent-up demand in the spring leading to modest price rises.

Economic Calendar

Expected Previous
09:00 EUR Market PMI Composite (Dec) 47.3% 46.9%
09:30 GBP Market PMI (Dec) 49.3% 48.9%
14:45 USD Market Manufacturing (Dec) 52.60 52.60
14:45 USD Market Services (Dec) 52 51.6
17:00 GBP Bank Stress Tests and Financial Stability Results Report -

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.