British Pound: Stronger PMIs favour a hawkish BoE stance – Danske Bank

The UK’s flash composite PMI climbed to 53.1 in October, as new orders expanded at their quickest rate in over two years, according to the Danske Research Team. Hiring resumed, although input cost inflation reached its highest since June. Despite some supply-chain distortions, the bank views the figures as hawkish for the BoE ahead of its November meeting.

Stronger data reinforces risk of BoE tightening

"In the UK, the flash PMIs strengthened in October, with both services and manufacturing picking up. The composite rose to 53.1 from 52.0 as services increased to 53.1 from 52.1 and manufacturing edged up to 52.8 from 51.9."

"The details were also encouraging, with new orders growing at the fastest pace in over two years and employment returning to growth for the first time since September 2024."

"At the same time, input cost inflation rose to its highest level since June, mainly driven by higher energy, raw material and transport costs in manufacturing."

"However, part of the manufacturing gain reflected longer supplier delivery times, pointing to supply-chain disruptions rather than stronger demand. Overall, the print leans to the hawkish side for the BoE ahead of its November meeting."

"In the UK, the 2027 budget on Wednesday could gather attention ahead of the BoE's November meeting, as inflation concerns coupled with stronger growth could trigger a hike"

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)