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Jun 22 - 06:55 AM

GBP/USD - COMMENT-GBP Bears Hope UK PMIs Shunt Sterling Into Sidings

By Rob Howard  —  Jun 22 - 05:15 AM

Sterling could join British trains in the sidings on Thursday, the second day of the country's biggest rail strike in 30 years, if June's flash PMIs come in much worse than expected.

The service PMI is forecast to fall to 53.0 from May's 53.7.
The data on the service sector, the dominant segment of the UK economy, is due out at 0830 GMT on Thursday.

A big service PMI miss would be another blow for hawks advocating a 50 basis-point rate hike from the Bank of England in August, after UK May core CPI came in fractionally below forecast at 5.9% YY on Wednesday.
Headline CPI hit 9.1% YY, exactly as forecast. nL8N2Y917G

The UK inflation data spurred a dovish shift in BoE rate expectations, to the detriment of sterling -- which fell to six-day lows against the U.S. dollar and euro, at 1.2163 and 1.1598.

The probability of a half-point BoE hike on Aug.
4 is currently 59%, versus 75% on Tuesday, according to a Refinitiv measure based on interest rate futures. BOEWATCH

Related comment/column: nL1N2Y80FVnL8N2Y74K0

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Source:
Refinitiv IFR Research/Market Commentary

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