Sterling Slump: UK Business Activity Stalls Amid Tax Hike Concerns
The British pound declined on Tuesday as business activity showed signs of slowing, with concerns over potential tax hikes adding to economic uncertainty. The UK Composite PMI decreased to 51.0 in September. Despite some investor optimism, strategists foresee potential weakness for sterling, amid expectations of future BoE rate cuts.
The British pound experienced a downturn on Tuesday following a survey indicating a slowdown in business activity in early September. Companies are reporting reduced momentum and confidence due to looming tax increase threats later this year.
S&P Global's preliminary UK Composite Purchasing Managers' Index, which evaluates both the services and manufacturing sectors, fell to 51.0 in September, down from August's 53.5. This figure hovers just above the 50.0 mark that differentiates growth from contraction, and it surpassed economist predictions that expected a slight dip to 53.0.
Sterling's value dropped by 0.2%, falling to a session low of $1.34885, before recovering to approximately $1.35. Although it remains 8% up against the dollar this year, BBVA strategists highlight sterling's struggle for traction. Investor sentiment is generally positive, but pressures on the pound persist, with forecasts of potential BoE rate cuts in the near term as inflation concerns grow.
Google News