UK: Recent events and data releases may be underpinning British resiliency - BBH

Research Team at BBH, suggests that the Bank of England does not meet this week, but the MPC will meet the following week on September 15. 

Key Quotes

“The recent string of data suggests that the Brexit decision was a shock to the economy.  The July data, like the industrial output, manufacturing production and construction that will be reported this week will reflect that shock.

However, the news has been superseded.  The August manufacturing and construction PMIs that were reported last week were better than expected.  The combination of no immediate policy changes, including triggering Article 50 and the divorce proceedings, and the decline in sterling and the fall in interest rates may be underpinning British resiliency.  Because of the structure of the UK economy, and especially the high proportion of household debt (mortgages) are at variable rates, the fall in rates can be passed through relatively quickly.  It has a one-off impact, as does the decline in sterling. 

If PM May is not going to trigger Article 50 until next early next year, at the soonest, and the BOE is on the sideline, then there is no reason why the Brexit decision needs to be the dominant driver of sterling over the next, say, couple of months.  That said, May indicated that the government will outline is broad plans for the post-exit relationship with the EU.  Brexit Minister Davis will present this to parliament.  It may ease speculation in some quarters that due to the complexity of the issue, or the second thoughts by some, the Brexit was not really going to happen.”