UK in the limelight as economics and politics command attention – BBH

By FXStreet Research Team at BBH, suggests that the UK will be very much in the limelight this week. Economics and politics will command attention.

Key Quotes

“The UK reports three PMIs; manufacturing, construction, and services. The gradual slowdown is set to continue. The composite PMI, which provides an overall reading, is expected to slip to 53.2 from 53.6. It averaged 54.2 in Q1 and 55.5 over the past year.

Many observers are attributing the slowdown to next month’s referendum. We are not convinced, as the moderation began in the middle of last year. Moreover, at 2.1%, the Q1 year-over-year pace matches the five-year average. An exogenous factor (referendum anxiety? in this case) is not needed to explain the quarter-to-quarter vagaries in a GDP estimate, which like all GDP estimates may give a greater sense of precision than justified by the methodology.

Sterling’s gains have lifted it to four-month highs against the dollar but may reflect the broadly weaker US dollar tone more than UK positive developments. Many observers focus on the benchmark three-month tenor in the options market. Seeing lower implied volatility and a smaller premium for puts over calls, …read more

Source:: FX Street