Firm sentiment deteriorated in UK noticeably in April and is likely to worsen further as the EU referendum draws nearer, supporting our expectation of zero growth in Q2 16.

UK PMIs for all sectors have deteriorated considerably.

Manufacturing PMI – Decline from previous flash of 50.7 to the current 49.2.

Construction PMI – Decline from previous flash of 54.2 to the current 52.0.

Service PMI – Decline from previous prints of 53.7 to the current 52.3.

Preliminary GDP (q/q) has been narrowed down to 0.4% from previous 0.6%.

As a result, we expect the BoE’s bank rate is likely to be unchanged in this week’s monetary policy, as is the split of the vote. We think the Committee is likely to continue to look through EU referendum uncertainties.

We expect a swathe of downward revisions to Committee forecasts in May’s Inflation Report, notably to domestic growth, given recent weaker-than-expected data.

No change is expected in the Bank Rate and the APF decision at the May BoE’s MPC meeting prior to the EU referendum result to be announced on 24 June as for the tone of the minutes.

Further, we believe the Committee is likely to look through any weakness in data, putting it down to rising EU referendum uncertainties. Also, the Committee’s economic forecasts will be updated in the May 2016 Inflation Report.

We expect downward revisions to UK economic growth forecasts on the back of weaker-than-expected data since the February 2016 Inflation Report, and as a consequence we expect downward revisions to global growth forecasts.

The trader who continues to suspect that this week's economic numbers such as UK’s manufacturing production, UK’s trade balance, BoE’s inflation report to produce poor set of numbers and monetary policy would in turn likely weigh GBP cross rates. Especially, pairs such as GBPJPY, GBPUSD and GBPAUD to depreciate further.