Pound looks to extend recovery; Service sector data beats

Summary:

  • UK service PMI: 51.0 vs 50.6 exp and 50.4 prior

  • Beats forecasts but overall surveys suggest slowing economy

  • UK stocks join global bounce


The latest look at the UK service sector has provided some slightly better than expected news with a PMI reading of 51.0 just topping consensus forecasts. The data for April represents the second beat so far this year and more importantly is signals another month of expansion, albeit at a subdued pace. After the March reading fell below 50 there was a growing concern that the most important of the 3 sector surveys would signal further contraction but it seems to be just about holding up ok for the time being. This is far from a picture of real strength and while a modest increase in business activity and new work rising for the first time this year, all the signs continue to point to the UK economy being close to stagnation. The pound has moved back up near its highest level of the day after the release and is back above the $1.27 handle as it looks to recover from the recent declines.

UK services PMI picked up in April but the overall picture remains far from strong for the UK economy according to the recent survey results. Source: XTB Macrobond

 

Stocks attempt to build on recent recovery

There’s been a bright start for European markets this morning after yesterday’s US session saw Wall Street enjoy its 2nd best day of the year as equities rallied due to an unwinding of negative sentiment. Stocks were helped by Fed chair Powell edging a little further to the dovish side as well as some positive rhetoric on the trade front, but while these were no doubt contributing factors to the recent gains the main catalyst seems to be a snapback in sentiment that had gotten fairly negative after several weeks of near constant pessimism on the news front. The core issues for the negativity of a slowing global economy and the ongoing trade tensions are unlikely to east too much anytime soon, but after several weeks of declines the near-term outlook is more positive for the markets and this bounce could well extend further in the coming days.

The FTSE is higher for the third day in a row as the market enjoys a boost from the rise in global equities. Possible Head and Shoulders still forming with 7370 potential right shoulder and 7075 the neckline. Source: xStation

 

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