Tuesday began with the release of PMI (Purchasing Managers’ Index) figures from several European countries and the broader European Union, presenting mixed signals around the crucial 50-mark threshold. Typically, a reading above 50 signals economic expansion, while a reading below indicates contraction. The divergence across countries led to the EU’s composite figure landing just above the line at 50.4. Given this marginal result, markets reacted with little enthusiasm and remained largely unchanged following the data.
At 9:30am, the UK followed with its own PMI releases, showing contraction in both the composite and services sectors, with readings of 48.5 and 49, respectively. This reinforces the narrative of a cooling UK economy—something we’ve seen building over the past few months. Attention now shifts to Thursday’s Bank of England interest rate decision. With signs of slowing growth, this only cements BoE decision to lower borrowing costs to stimulate economic activity—an increasingly pressing necessity.
Markets have opened cautiously overall, with modest movements as investors adopt a wait-and-see approach ahead of tomorrow’s Federal Reserve interest rate decision. Could political pressure from Donald Trump be influencing the Fed to cut rates sooner than expected? If that proves to be the case, we could see further USD weakness and a notable reallocation of funds and assets away from the U.S.—benefiting other currencies in the process.
GBP/EUR 1.1742 GBP/USD 1.3311 GBP/AED 4.8917
GBP/AUD 2.0628 GBP/CHF 1.0960 GBP/CAD 1.8398
GBP/NZD 2.2260 EUR/USD 1.1327 GBP/ZAR 24.2913