Stronger than expected construction sector PMI follows the upside surprise that we saw in manufacturing PMI earlier this week. Overall the UK economy is strong, which is why we also expect service sector PMI to be firm tomorrow as well. The Bank of England kept interest rates unchanged today, which was right in line with expectations.
Next week, the central bank will be publishing their Quarterly Inflation Report and like the ECB we expect them to remain concerned about inflationary pressures. Having just raised interest rates last month, we did not expect a back to back rate hike, but at the same time, we do expect rates to be taken to 6 percent by the end of the year as long as conditions remain the same, that is oil prices hold near its current levels and the global economy does not see a major recession.