UK: First true post-Brexit PMIs likely to attract some extra attention - Rabobank

Bas van Geffen, Quantitative Analyst at Rabobank, suggests that today sees a proper chain of PMI data keeping markets busy from 9:00 (France) until 15:45 CET (US).

Key Quotes

“These preliminary PMIs are likely to attract some extra attention this month, as these are amongst the first true post-Brexit data. Therefore, these numbers may give an initial indication of the business environment after the ‘Leave’ vote – particularly for the UK itself. Although especially the UK data has already shown increased uncertainty in the run-up to the referendum, this month’s PMI will be the first to reflect the uncertainty after the ‘Leave’ outcome; the clouded outlook that comes with this result certainly hasn’t helped confidence and the consensus expectations are for the UK PMIs to fall to around the 49 level; i.e. into contractionary territory.

The results of these PMIs could therefore weight further on sterling, if the market estimates that downbeat data may force the Bank of England’s hand in the next meeting – especially when placed in light of Haldane’s earlier remarks that a “monetary response, if it is to buttress expectations and confidence, needs I think to be delivered promptly as well as muscularly”. Whilst one data point may not convince the Monetary Policy Committee just yet, the market may continue to increase speculations that the bank will see the need to do something in early August.”