May 3, 2018 / 10:41 AM / a year ago

Britain central bank rate hike bets drop further after PMI data

FILE PHOTO: The Governor of the Bank of England, Mark Carney, speaks at an event at the Bank of England in the City of London, London, Britain April 27, 2018. REUTERS/Toby Melville

LONDON (Reuters) - Market probability of a rate hike from the Bank of England next week have dropped to less than a tenth on Thursday from more than 90 percent a month ago, according to swap market pricing.

Weak survey data from Britain’s services sector for April rounded off a disappointing streak of economic figures starting with last week’s shock first quarter GDP data and cautious comments from Bank of England Governor Mark Carney last month.

The IHS Markit/CIPS services purchasing managers’ index (PMI) rose to 52.8 in April from March’s 20-month low of 51.7, a smaller increase than economists had forecast in a Reuters poll and its second-lowest level since September 2016.

As rate hike expectations have dwindled, sterling has tanked with the British currency weakening nearly 6 percent from a post Brexit referendum high of $1.4377 hit last month.

Reporting by Saikat Chatterjee, Editing by Abhinav Ramnarayan

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