Good morning,
Pound sterling fell sharply yesterday morning after figures showed momentum in Britain’s private sector slowed much more than expected, adding to recession worries as inflation pressures ratcheted higher. This indicates a heightened risk of the economy falling into recession as the Bank of England fights to control inflation. We saw GBP/USD fall 0.7% immediately after the news.
S&P Global’s flash Composite Purchasing Managers’ Index (PMI) survey showed rising pessimism from services and manufacturing industries after the figure slumped to 51.8 in May from 57.6 in April, its lowest level since February last year. The reading was worse than all forecasts in a Reuters poll of economists, which had pointed to a drop to 57.0, and the scale of the fall was bigger than any seen pre-COVID. Until now, most surveys of British business activity had been fairly robust, despite record-low consumer confidence after inflation hit a 40-year high of 9%.
Have a great day.
Author: William Jones, Senior Relationship Manager.
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References
https://www.reuters.com/world/uk/sharp-slowdown-uk-businesses-rings-recession-alarm-pmi-2022-05-24/