UK manufacturing PMI to confirm slowing growth

Thursday's manufacturing PMI is likely to show a further decline in September to 51.0 (consensus: 51.3; last: 51.5), confirming the broader moderation in UK economic activity. While the consensus expect final Q2 GDP is to be confirmed at 2.6% y/y (Wednesday), growth is expected to fall to 2.0% y/y by year-end. 

While the GBP has roughly kept pace with the USD this year, and it is expected to outperform the EUR due to a significant growth differential, headwinds may finally begin to take a toll on cable over the coming year. UK economic growth, while slowing, remains relatively robust, but fiscal consolidation will likely weigh on activity in an environment of surprisingly low inflation and the underpriced impending EU referendum