Nomura's European Economics team noted that the UK composite PMI rose to 52.5 in August, driven by strength in the services sector that offset weakness in manufacturing. Additionally, GfK consumer confidence reached its highest level in two years, reflecting improving household sentiment and supportive economic activity. For currency markets and investors, the expansion in services combined with persistent price pressures presents a complex backdrop for the Bank of England. Stronger consumer confidence and services activity could sustain underlying inflation, potentially keeping UK interest rates elevated for longer compared to other major economies. Looking ahead, traders should monitor upcoming Bank of England policy meetings and domestic wage data. The divergence between resilient services and soft manufacturing will remain a key determinant for GBP exchange rates and broader UK asset valuations.
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