23 May 2023
Although growth in Britain’s economy likely continued in May, as per new survey data, Sterling declined as the figures fell short of analysts’ forecasts.
Indeed, the Pound was weaker against the Euro and Dollar following S&P Global’s services PMI registering 55.1 this month, a reduction from April’s reading of 55.9 and under economists’ forecasts of 55.5.
In addition, the manufacturing PMI stood at 46.9, down from 47.8 in April. The 50-mark separates growth from contraction.
Whereas the composite PMI registered 53.9, below predictions for a reading of 54.6 and the prior month’s 54.9.
“May data signalled another solid increase in private sector output, but the speed of expansion slowed since April,” S&P Global stated.
Although the data indicates the UK economy continues to grow, this is another example of key data falling short of expectations, Pound Sterling Live reports.
Sterling has benefited for most of the year to date as muted economic forecasts were continually surpassed by real data.
That said, the trend may now be shifting and disappointing data could weigh on the Pound in the weeks to come.
The Pound to Euro rate was trading a quarter of a percent down on Tuesday after the data was published at 1.1475. Whereas the Pound to Dollar rate was 0.40% down at 1.2388.
The data shows robust consumer demand within the travel, leisure and hospitality businesses, yet manufacturing firms signalled the sharpest drop in production levels in four months.
The economic outlook for the UK appears to be becoming more challenging, the Pound Sterling Live report adds, with businesses feeling the impact of the interest rate hikes.
This latest data suggests Britain’s economy will likely continue to move along at an average rate over the next few months, fuelling questions amongst analysts as to whether Sterling’s strong run is now over.