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UK’s underlying economic current remains strong

In spite of stronger Pound creating headwinds for exports and rate hike from Bank of England (BOE) looming ahead, UK's economy continued to show signs of improvement.

According to latest survey from conference board,

  • Overall manufacturing output is growing steadily heading into August and is expected to continue to the next quarter. In spite of export orders remaining below average close to 50% of the sub-sectors, strong domestic demand is fuelling overall growth in orders.

In spite of improvement, producer price deflation continues to remain a concern.

Key highlights -

  • 21% of manufacturers reported that the level of their order books was above normal, while 22% said it was below normal. Strong improvement from July's survey.
  • 20% of firms said their export order books were above average, while 29% said they were below. The gap is still above average of -20% and -17% in July.
  • 33% of firms reported higher output for three months to August, while 20% said it decreased. Gap is well above average of +3%.

Pound is likely to gain back its lost groove over the coming days. Pound is likely to trade higher and break the recent range against Dollar. Pound is currently trading at 1.566 against Dollar.

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