Good for the pound! Baidu Finance Trend MT4.MT5 Master

On July 26, Barclays economists raised their forecast for the scale of the Bank of England's rate hike in August.

 

 

 

After assessing the upcoming data from the UK and the signals from the Bank of England, the Barclays UK economics team said that for now, the Bank of England may raise interest rates by 50 basis points on August 4.

 

At the same time, Barclays noted that the UK data is proving "overall fairly resilient data" suggesting the economy is "cooling, but not collapsing".

 

The S&P Global PMI for July showed a reading of 52.8, above expectations for a reading of 52.5 but still down from 53.7 in June.

 

S&P Global, which compiles the PMI data, said that while business activity at UK private sector firms rose for the 17th consecutive month in July, the pace of expansion was the weakest over the period. The slowdown in output growth mainly reflects weak demand and capacity constraints due to material and staff shortages.

 

"On a more positive note, the latest data shows that input cost inflation has slowed sharply since June to the lowest level in 10 months," S&P Global said.

 

Barclays now expects the Bank of England to raise rates by 50 basis points in August and 25 basis points in September, raising the bank rate to 2% and will keep it there.

 

Meanwhile, Kallum Pickering, an economist at Berenberg Bank, said the BoE's meeting on Aug. 4 and Sept. 15 was due to hawkish signals from BoE Governor Bailey. A 50bps rate hike each is the most likely outcome (up from 25bps previously forecast).