Today’s economic news was a real clincher in terms of ensuring that the MPC will increase its asset-purchase program by at least GBP 50bln when it meets on Thursday. The construction PMI fell below 50 last month to the lowest reading since late 2009; no doubt the damp weather weighed on this outcome, but at the same time it is consistent with most recent indicators suggesting that the economy is still really struggling. Separately, the demand for finance by households and businesses remains very weak, with M4 money supply falling by 4.1% in the year ended May. These figures have taken very slightly the edge off sterling today, although volumes are thin and traders are generally reluctant to take on risk as we head into the traditional summer trading hiatus.
