UK: All eyes in BoE’s FSR and June services PMI data - TDS

Research Team at TDS, suggests that the Bank of England releases its biannual Financial Stability Report, which will provide a first glimpse at the FPC’s response to the Brexit vote.

Key Quotes

“The FSR is likely to be accompanied by some post-Brexit financial system policy, possibly in the form of a 50bps cut to the countercyclical capital buffer (CCyB). A press conference follows the release, where Governor Carney will undoubtedly need to provide an updated assessment on the UK economy. Today also marks the first secret ballot in the Conservative party leadership race, where MPs will knock one name off the list of five contenders. Assuming no one steps out of the race, it then goes to a 4-person vote on Thursday, and concludes next Tuesday when just two names will be left.

On the data front, markets will likely ignore the June services PMI, as the index enjoys one last (mostly) pre-Brexit reading. While timing of the survey will massively affect the results, if almost all firms were surveyed pre-23 June, then we see upside risks, with a relatively unchanged print on the month versus consensus of a decline by just over half a point. If however, enough companies were surveyed after the referendum, this could pose significant downside risks, as we saw in Monday’s construction PMI.”