Next week will be a much busier one in terms of macroeconomic news out of the UK

The pound has risen back towards the $1.36 level on the US dollar in the past few trading sessions. While this has been largely due to broad weakness in the greenback, domestic factors have also been supportive of sterling.

This week’s updated UK PMI figures provide reason for optimism, as the composite index was revised sharply higher to 50.3 in May (from the initial 49.4 estimate), i.e. back above the key level of 50 that separates growth from expansion.

 As we’ve been stressing for some time, Britain’s economy should be well positioned to weather the tariff storm, while at the same time inflation is printing well above the BoE’s 2% target.

 This is likely to keep the MPC hawkish for a while yet, and communications from committee members this week have done little to change this view.

 Next week will be a much busier one in terms of macroeconomic news out of the UK. We will be paying particular attention to Tuesday’s jobs report and Thursday’s monthly GDP data for April.

 The latter could hint at the beginning of a second quarter slowdown as higher business tax rates and household energy bills lead to a weakening in the labour market and a provide a squeeze on disposable incomes.