FX.co ★ Sterling Weakens from 2-Week High

The British pound receded to $1.354 from its recent two-week peak of $1.358, following disappointing UK PMI data that heightened concerns regarding the economy and increased speculation about potential Bank of England interest rate reductions. Both the services and composite readings fell short of expectations, indicating a more significant slowdown in private sector growth, while the manufacturing sector experienced a less severe contraction than anticipated. Although there was a modest uptick in input price inflation, analysts predict that the Bank of England will focus on stimulating growth over curbing inflation given the soft data and a more flexible labor market. Market participants are now looking forward to retail sales figures, which are anticipated to improve due to favorable weather conditions. Meanwhile, overall market optimism received a boost from indications of progress in US-EU trade discussions. Reports suggest a potential 15% tariff agreement is being formulated, with the EU keen to include the automotive sector. President Trump stated he would not consider tariffs below 15% and hinted that some tariffs could reach up to 50% ahead of the August 1 deadline.