Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

U.K. Public Sector Borrowing And Flash PMIs In Focus

By CMC Markets (Michael Hewson)Market OverviewMay 24, 2022 06:47
U.K. Public Sector Borrowing And Flash PMIs In Focus
By CMC Markets (Michael Hewson)   |  May 24, 2022 06:47
Saved. See Saved Items.
This article has already been saved in your Saved Items

We saw a strong start to the trading week for European markets yesterday, with decent gains across the board, however before one gets too bullish, yesterday’s moves kept us below the highest levels seen this month.

US markets also had a good day, building on the rebound that we saw off Friday’s 18-month lows from the Nasdaq 100 and S&P 500 to close modestly higher.

Having fallen for 7 weeks in a row US markets are overdue a bit of a bounce, and unlike the declines of the last few weeks, the Nasdaq 100 rally yesterday lagged that of the Dow and S&P500, which led yesterday’s move higher. We could well see further gains in the days ahead, however as with any bear market rally we need to see a move above previous reaction highs to gain confidence that a short-term low is in.

For that we need to see a sustained move above 12,600 in the Nasdaq 100, and 4,100 in the S&P500, and we’re still some way off that, as US futures slid back sharply after Snap (NYSE:SNAP) cut its Q2 guidance.

While US markets closed in solidly positive territory yesterday, momentum overnight has waned with the result that today’s European open looks set to be a negative one, with the main focus today on UK public sector borrowing and flash PMI data, as well as comments from ECB President Christine Lagarde.

UK public sector borrowing for April is expected to show borrowing rose by £17.9bn, a modest increase on March’s £17.3bn figure. Nonetheless, today’s numbers are still expected to mark a significant drop from the same month last year, and the year before, when the UK government borrowed £28.3bn and £47.8bn respectively, due to the huge measures that were taken to support the UK economy during the pandemic.

This fall certainly marks progress, however, it is still well above the levels we saw in the years leading up to 2020, when April public sector borrowing for 2019, was as low as £6.2bn.

Today’s flash PMI numbers are rapidly losing credibility in terms of the headline numbers at least, when it comes to assessing the resilience or otherwise of the French, German and UK economies.

In terms of the wider economy, it is quite apparent that economic growth is struggling across the bloc as well as here in the UK.

Yet to look at the PMI numbers it would be tempting to think that all is well. Nothing could be further from the truth with rising energy prices and supply chain disruptions posing significant challenges to business, large and small.

Manufacturing and services PMIs are all expected to slow from the numbers we saw in April all of which were in the mid 50’s for all three of the UK, Germany and France, but the slowdown is not expected to be material.

In France, manufacturing is expected to slow to 55.2, from 55.7, and services from 58.9 to 58.5.

In Germany, manufacturing is expected to slow to 54, from 54.6, and services from 57.6 to 57.1.

In the UK, manufacturing is expected to slow to 55, from 55.8, and services from 58.9 to 57.0.

We also have the latest CBI retail sales numbers for May, which is expected to see a modest improvement from -35 in April to -30.

The US dollar underwent a bit of a slide yesterday with the euro moving to within touching distance of a four-week high, after ECB President Christine Lagarde, along with a few other governing council members indicated that rate rises would start in July in a blog post yesterday. She is set to elaborate further on those comments in an interview at Davos later this morning.

EUR/USD – has continued to push higher, above the 1.0650 area and looks set for a test of the 1.0800 level where we have trend line resistance from the February highs, as well as the 50-day MA. We currently have support at the 1.0530 area.

GBP/USD – has broken above the 1.2520 area but we now need to see a move beyond the 1.2630 area to argue a short-term base is in. We now have interim support at the 1.2470 area, and below that at the 1.2320 area. Above 1.2630 argues for a return to the 1.2830 area

EUR/GBP – rebounded from the 0.8420/30 area, with resistance still at the highs from last week at 0.8525/30.

USD/JPY – still has solid support just above the 126.80 area, but we’re currently struggling to move above the 128.30 level. A break below targets the 123.00 area. If 126.80 holds then a move towards the 135.00 area target remains intact.

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

Original Post

U.K. Public Sector Borrowing And Flash PMIs In Focus

Related Articles

Antoine Bouvet
Rates Spark: The End Is Near By Antoine Bouvet - Feb 02, 2023

US market rates fell after the Federal Reserve decision but this looks more like a market positioning effect than anything specific from the meeting. Expect some retracement. Both...

Naeem Aslam
What You Need To Know About BOE and ECB By Naeem Aslam - Feb 02, 2023

BOE As for today’s economic calendar, we have two important economic events unfolding. Firstly, it is the Bank of England’s meeting. The bank is expected to increase the interest...

U.K. Public Sector Borrowing And Flash PMIs In Focus

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email