Stronger-than-expected UK services PMI data lifted the pound, while US Treasury bond buyback plans weighed on the dollar.
The British pound surged to a six-month high against the US dollar, trading above 1.3670 after UK business activity data exceeded forecasts. July’s UK Services PMI rose to 52.8, up from 52.1 in June, defying expectations of a decline to 51.8.
Manufacturing PMI dipped slightly to 51.5, matching consensus, while the Composite PMI climbed to 52.5. Retail sales contracted 0.5% in July, in line with expectations, though year-over-year growth slowed to 1.6%. Public sector net borrowing reached GBP 1.8 billion, surpassing forecasts of GBP 0.3 billion.
The US dollar remained under pressure after Treasury Secretary Scott Bessent indicated potential increases in bond buybacks beyond the $4 billion per operation announced earlier.