- Chris Williamson, chief economist at Markit
Following two consecutive disappointing reports from manufacturing and construction sectors, the Sterling has lost some of the value versus other major currencies and moved closely to a major level at 1.67. These sectors, however, accounts for just slightly more than 20% of the overall economic activity, hence, only services PMI can be a clear indication about the second quarter's growth. The fact services grew at a faster pace than it was expected boosted confidence about the outlook and stronger hiring in the nearest future. Immediately after the report the cable bounced off daily lows around 1.6699 and head towards 1.6725 aiming weekly pivot.
A gauge of activity in the key sector, which represents around 78% of economic activity, rocketed to 58.6 in May, outpacing analysts' predictions for a 58.2 reading, slowing from April's 58.7, however still hovering highly above the 50 threshold. The BCC expects the sector to remain the strongest upward driver of the economy in the next three years. They expect the sector to expand 3.1% this year and slow to 2.9% and 2.7% in 2015 and 2016 respectively. Figures from all three sectors are pointing at a 0.8% growth this quarter, matching the pace of the first three month of 2014. The Bank of England will gather this week to assess the economy and amid improving data analysts have revived speculation first rate hike can be made later this year.
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