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UK: Monday`s poor UK IP, manufacturing and trade data adds yet more weight to
the ONS` interpretation of recent data as indicative of underlying economic
weakness, in contrast to the BoE`s more optimistic take.
- While many were quick to attribute to the adverse weather conditions
experienced late February/early March, ONS statisticians were adamant the Q1 dip
simply further extended a downward trend present for almost two years.
- After the rate hold on May 10, with a previously-expected hike derailed by
weak Q1 data, BoE governor Carney BoE said `we think the momentum in the economy
is going to reassert`. MPC voter David Ramsden on June 7 affirmed that the UK
economy was bouncing back in Q2 and that Q1 weakness was fleeting.
- In contrast, MNI's data team has been more in line with the ONS`s take than
the BoE`s, with our analysis on June 6 for instance highlighting that weak
household spending is not a new issue and pre-dated even the 2016 Brexit vote.
- With evidence mounting that the Q1 slowdown was not an anomaly, the 57%
pricing of an August hike (per MNI PINCH) marks a fall from 65% Friday. While
well up from the low of 25%, the balance of risks may yet be to the downside.