Two of the leading investment banks operating in the city of London, Credit Suisse, and Morgan Stanley have revised their forecast of a recession in the United Kingdom, in the aftermath of the Brexit referendum that was held in June. As economic data from the UK surprised so far on the upside, forecasters are left with scratching their heads and revising their outlook. After a major dip in July, all of the PMI data have bounced back, pointing to a continuation of growth. It is highly possible that the dip in activity seen in July could have been just sentiment driven.

Both of the banks have revised their growth forecast for 2016 and 2017 upwards. Credit Suisse increased their forecast for 2016, from 1 percent to 1.9 percent and for 2017, from 1 percent contraction to 0.5 percent growth. Morgan Stanley, on the other hand, revised its forecast from 1.2 percent to 1.9 percent for 2016 and from 0.5 percent to 0.6 percent for 2017. However, both of them feel that Brexit would nevertheless slow down growth.

The pound is higher as the dollar weakens and economic data surprise. The sterling is currently trading at 1.34 against the dollar.