UK July PMIs and retail sales exceed forecasts, reducing near-term growth worries while easing inflation expectations for the BoE.
GBP/USD remains near 1.3300 after UK data signaled an improved growth-inflation balance. Stronger-than-expected economic indicators reduced concerns over near-term growth, while easing inflation expectations provided the Bank of England with flexibility to maintain its current stance.
The UK composite PMI rose to a three-month high of 52.1 in July, surpassing the consensus forecast of 49.8 and the prior reading of 48.8. Retail sales also beat expectations, increasing 1.0% month-over-month in June, compared to a forecasted decline of 0.3%. Excluding automotive fuel, sales rose 1.1%, defying a projected 0.5% drop.
Despite the positive headline figures, details suggest the retail sales boost stemmed from temporary factors like promotions, hot weather, and World Cup spending, rather than a sustained consumer recovery.