UK: RICS data sees some reversal in post-Brexit concerns - MUFG

Derek Halpenny, European Head of GMR at MUFG, notes that the pound remains broadly stable but given the general weakness of the US dollar, the GBP/USD rate continues to under-perform gains recorded for other major currencies versus the US dollar.

Key Quotes

“The RICS report for July was released earlier and the overall price balance fell from 15% to 5%, the lowest reading since April 2013. But there was some better news with all of the other components improving either dramatically or slightly after large plunges in June. The most dramatic improvement came in the two expectation measures – price expectations and sales expectations.

However, the BoE Agents’ Survey, released yesterday, provided compelling evidence for the easing action taken last week with the report concluding that companies expected a “negative effect from the vote on hiring, investment and turnover” with a “significant minority” deferring investment decisions.

We’ve still yet to see much in the way of ‘hard data’ on the UK economy and our sense is that another tumble for the pound is a high risk as the data begins to indicate that the BoE’s projection of very marginal positive growth in H2 2016 may well prove overly optimistic.”