UK’s headline June services PMI is expected to fall slightly to 53.5 from 53.8, though the 2pt fall in the manufacturing index suggests the risk is significantly to the downside, according to the research team at RBC Capital Markets.
“Confidence in both sectors is likely to have been hit by the rise in political uncertainty after the June 8 general election. At the time the PMI surveys were conducted, another general election this year seemed likely (prediction markets put the probability at 30%), though the perceived risk has subsequently receded significantly (implied probability now just 13%). The SONIA curve is 50% priced for a rate hike by year-end, which is optimistic relative to our economists’ forecasts. PM May takes questions in the Commons at noon today.”