The final economic indicator on the health of the UK economy has beaten analysts’ expectations. The Markit / CIPS UK Services PMI reading for April is an eight month high; 59.5 vs 58.9 previously. The release will be a welcome to George Osborne, following on from Tuesday’s poor construction PMI, the weak manufacturing PMI and miss for preliminary Q1 GDP estimate.
The services sector is the main component of the UK economy, with expansion in this sector significantly outweighing the impact of the same growth in construction or manufacturing.
Earlier on Wednesday the National Institute of Economic Social Research (NIESR) released their latest forecast for the UK economy. The cut their growth forecast for the UK economy to 2.5% in 2015, and 2.4% in 2016. They believe that unemployment rate will stabilise at about 5.25%, and that inflation will remain close to zero for the remainder of the year, with the first interest rate hike coming in the beginning of 2016.
The UK general election is tomorrow, and it was expected that the uncertain outcome would lead to a weakening Sterling. However with less than 24 hours until voters are able to begin casting their vote, GBPUSD is trading just shy of 1.5200, significantly above the early April lows (1.4560). The first votes should be counted and exit polls released late Thursday evening, with seats declared throughout the night. Sterling should be volatile; with Bloomberg stating the short-term volatility has been larger than at the same time at Scottish Independence vote in 2014.
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