British Pound: Strong PMIs and retail rebound in focus – TD Securities

TD Securities notes that the UK Composite PMI climbed back into expansion at 52.1 in July, led by Manufacturing strength and a Services PMI recovery to 51.8. Input cost inflation eased and business confidence hit its highest since February. Retail Sales also surprised to the upside, rising 1.0% month-on-month in June versus a market expectation of a decline.

Activity and spending show renewed strength

"The UK Composite PMI rose to 52.1 from 49.3, returning to expansion territory for the first time since April."

"Manufacturing led the recovery, with output growing and new orders recording their strongest increase since February 2022, supported by AI investment, data-centre supply chains, defense spending, and stronger exports."

"The Services PMI increased to 51.8, returning to growth for the first time since April as consumer-facing sectors and hospitality activity improved.Input cost inflation eased to a five-month low, while business confidence climbed to its strongest level since February, reflecting improving demand conditions and AI-related investmentLastly, retail sales rose 1.0% m/m in June (mkt -0.3%)."

"The strong number primarily came on the back of summer shopping amidst the heatwave and earlier timing for online discounting."