UK April PMIs Worst on Record

<h2>PMI Readings Plummet</h2>
<p>The latest set of PMI data sets out of the UK and Europe today cast further light on the damage being caused to individual economies by the ongoing COVID lock-downs which are still in place. The Purchasing Managers’ Indexes are some of the most keenly watched data releases each month. Comprised by surveying a range of price sector companies in manufacturing and services sectors, the data provides a keen sight into the health of the economy and prevailing business trend.</p>
<p>The HIS Markit preliminary UK manufacturing PMI for April came in at a shocking 32.9, well below both the prior 47.8 and the expected 42 reading. This reading now mars the lowest manufacturing PMI on record, even plunging beneath the levels seen during the global financial crisis in 2008/2009.</p>
<p>The services PMI for the same period suffered an even worse hit falling to all time lows of just 12.3. This was less than half the 27.8 reading expected and almost two thirds lower than the previous 34.5 reading.</p>
<h2>Massive GDP Hit</h2>
<p>The chief business economist at IHS Markit said <em>Business closures and social distancing measures have caused business activity to collapse at a rate vastly exceeding that seen even during the global financial crisis, confirming fears that GDP will slump to a degree previously thought unimaginable in the second quarter due to measures taken to contain the spread of the virus.</em></p>
<p><em>“Simple historical comparisons of the PMI with GDP indicate that the April survey reading is consistent with GDP falling at a quarterly rate of approximately 7%.</em></p>
<h2>Tensions Over UK Lock-down</h2>
<p>These two data points make for dismal reading and raise grave concerns over the health of the UK economy. The UK is currently in lock-down until May 7^th but already there is growing speculation that the stay-at-home measures will be extended.</p>
<p>Cabinet is reportedly split over the course of the lock-down with some, including the PM in favour of extending the measures to avoid causing a fresh escalation in the number of infections and deaths. Others, however, such as the chancellor Rishi Sunak and Michael Gove are in favour of the re-opening the economy quickly to avoid further economic damage.</p>
<p>The UK PM now finds himself in an incredibly difficult position. Ending the lock-down could risk a fresh wave of infections ultimately leading to the measures needing to be reintroduced, or risk overwhelming the NHS, however, keeping the lock-down in place could devastate the UK economy to a point of lasting damage for years to come.</p>
<h2>Technical View</h2>
<p><strong>GBPJPY (Bullish above 132.22)</strong></p>
<p>From a technical viewpoint. GBPJPY has been turning lower again over the last week, guided by the bearish trend line from 2020 highs. Price is currently supported by the monthly pivot at 132.22. However, with VWAP negative, a break lower looks likely and the 130.69 mark will be the next level to watch, with a confluence of key structural support and the yearly S1.</p>
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