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More rate hike doubts push pound to January low

A report showing UK manufacturing growth slowed to a 17-month low in April has helped cast further doubts in financial markets that the Bank of England will raise interest rates next week.
The Markit/CIPS UK Manufacturing purchasing managers' index (PMI) showed a reading of 53.9 last month, lower than the 54.9 for March.Economists were expecting a figure of 54.8. A reading above 50 indicates growth.Rob Dobson, director at IHS Markit, said: "The start of the second quarter saw the UK manufacturing sector lose further steam. The headline PMI dipped to a 17-month low as growth of production, new business and employment all slowed."While adverse weather was partly to blame in February and March, there are no excuses for April's disappointing performance, making the chances of a near-term hike in interest rates by the Bank of England look increasingly remote.
More rate hike doubts push pound to January low

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What does weak consumer data mean for the economy
"On this footing, the sector is unlikely to see any improvement on the near-stagnant performance signalled by the opening quarter's GDP numbers."Further data on Tuesday morning showing a collapse in consumer borrowing added to the growing sense of doom.There was a shock for economists and financial markets last Friday when official figures suggested the economy expanded by just 0.1% in the first three months of the year.A plunge in construction activity and weather conditions brought on by the Beast from the East were partly to blame for the poor performance.The pound - bolstered in recent months by the prospect of an interest rate hike - hit a four-month low following the manufacturing and borrowing data and was trading below $1.36 by Tuesday afternoon as a stronger dollar also weighed.
Bank of England governor Mark Carney had cautioned before Friday's growth figures that the Bank may wait to increase rates to 0.75% because economic data had been mixed.
More rate hike doubts push pound to January low

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Mark Carney has said the Bank may wait to increase rates because economic data has been mixed
In its latest manufacturing report, IHS Markit also said business optimism dipped to a five-month low and April also saw growth of new export business slow to a ten-month low."The slowdown reflects weaker demand at home and overseas; both the overall and new export orders balances dropped to 10-month lows in April," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics."Growth in the manufacturers' main export market, the Eurozone, appears to have slowed this year, while the boost to growth in output from sterling's 2016 depreciation has begun to fizzle out."There was more disappointing economic data from the Bank of England on Tuesday, as consumer borrowing slowed in March to its lowest since March 2015.Unsecured consumer credit lending grew by 8.6% to €254m from February. Economists polled by Reuters had been expecting a growth of €1.45bn.
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Howard Archer, chief economic advisor at EY Item Club, said: "While March's slowdown in consumer credit growth was likely influenced significantly by retail sales and other activity being hit by the severe weather, the overall impression is that consumer have recently become more cautious in their borrowing while lenders have become warier about advancing unsecured credit."This is welcome news for the Bank of England given its view that recent rapid growth in consumer credit has created a "pocket of risk".
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