Global growth worries and uncertainty surrounding the upcoming Brexit referendum seems to have finally dented UK activity. Indeed, all three Markit/CIPS surveys fell in January. The composite PMI now points to quarterly GDP growth of only around 0.3% and has fallen below that of the euro-zone again. These uncertainties have also resulted in implied expectations for the first rate hike being pushed back yet further and a depreciation of sterling. Admittedly, the market movements effectively ease UK monetary conditions and global growth worries have shown a tentative easing more recently – resulting in a rebound in equities. Nonetheless, Brexituncertainty should keep a check on the recovery for now, with a potential for a bounce-back as the picture of the UK’s relationship with the EU becomes clearer.
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