The UK service sector has caught up with the manufacturing sector, and today’s PMI data for April suggests that the UK economy will rebound once more in Q2, after a disappointing start to the year. This has been greeted by a bounce higher in the pound, although GBP/USD hasn’t been able to sustain gains above 1.2900 so far.
As we move into election season, the UK economy is playing into Theresa May’s hands, which could help to reduce political uncertainty as we lead up to the General Election next month. This is significant for UK assets, particularly the pound, which has been very sensitive to UK political risk post-Brexit. Thus, an easy win for Theresa May next month combined with a pick-up in UK economic data could help GBP/USD break through the 1.30 barrier in the coming weeks. As we lead up to the election on June 8th June, UK economic data will be just as important as the polls for traders to keep an eye on.
UK service sector growth hits four-month high, but car sales slump – as it happened – The Guardian