BTMU FX Strategy Research notes that as the BoE MPC settles down at the start of its two-day monetary policy meeting today and begins to analyse the data and the findings in the Quarterly Inflation Report, there will surely be one glaring piece of evidence – the UK corporate sector looks to be nicely set up to take advantage of the devaluation of the pound.
“Yesterday, we had the more regular monthly PMI Manufacturing report but the message here was very similar. The overall PMI jumped from 54.2 to 55.1 in July but the export order component jumped to the second highest reading in the record of the series going back to 1992
This all will reassure the MPC in its assessment of how the UK economy is coping with the hit to real consumer spending. It should strengthen the MPC’s belief that the UK economy will continue to prove resilient to the uncertainty related to Brexit negotiations that will continue to create a notable element of uncertainty going forward”, BTMU argues.
BTMU’s view remains that GBP/USD has entered into a new trading range into year-end between 1.3000 and 1.3500 as investors acknowledge the greater resilience of the UK economy and the greater prospect of a smoother transition to Brexit after March 2019 than was previously feared.
Source: BTMU Research
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