7 May 2015
UK services PMI provides reassurance ahead of the election – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, views that the UK services PMI suggests the economy is likely to expand strongly ahead, and a probable weighed down GBP due to political uncertainty will likely provide a good buy on dips opportunity.
Key Quotes
“The pound has remained resilient head of today’s general election weakening only modestly so far this week. With political uncertainty set to rise over the next week or so depending on how long it takes to agree upon a working government, the pound is likely to be subject to some modest downside risk in the near-term.”
“The most favourable outcome for the pound at least initially would be a result which allows the current coalition parties to form the next government. The Conservatives would have to perform better in the election than suggested in most of the opinion polls. If the Conservative party falls short of winning enough seats required to be able to form a working majority it would likely weigh on the pound in the near-term. The Labour party would then get the opportunity to form a more left leaning government.”
“The polls will close at 10pm tonight and the first results are estimated to be announced at 11pm. Most of the results will have been announced by tomorrow morning, although the final results will not be known until just after mid-day.”
“If the election result is on a knife edge the seven constituency results released just after mid-day tomorrow will take on greater importance.”
“If heightened uncertainty weighs more heavily on the pound in the near-term, it could create an attractive opportunity to buy the pound on dips.”
“The release of the latest services PMI survey yesterday provided reassurance that the UK economy is still likely to expand strongly with the slowdown in Q1 more likely to prove temporary. However, the economy is becoming increasingly reliant on the service sector for growth to offset a loss of momentum in manufacturing and construction.”
Key Quotes
“The pound has remained resilient head of today’s general election weakening only modestly so far this week. With political uncertainty set to rise over the next week or so depending on how long it takes to agree upon a working government, the pound is likely to be subject to some modest downside risk in the near-term.”
“The most favourable outcome for the pound at least initially would be a result which allows the current coalition parties to form the next government. The Conservatives would have to perform better in the election than suggested in most of the opinion polls. If the Conservative party falls short of winning enough seats required to be able to form a working majority it would likely weigh on the pound in the near-term. The Labour party would then get the opportunity to form a more left leaning government.”
“The polls will close at 10pm tonight and the first results are estimated to be announced at 11pm. Most of the results will have been announced by tomorrow morning, although the final results will not be known until just after mid-day.”
“If the election result is on a knife edge the seven constituency results released just after mid-day tomorrow will take on greater importance.”
“If heightened uncertainty weighs more heavily on the pound in the near-term, it could create an attractive opportunity to buy the pound on dips.”
“The release of the latest services PMI survey yesterday provided reassurance that the UK economy is still likely to expand strongly with the slowdown in Q1 more likely to prove temporary. However, the economy is becoming increasingly reliant on the service sector for growth to offset a loss of momentum in manufacturing and construction.”