Pound Dips Below $1.35 on Weak UK PMI and Fiscal Concerns
The British pound slightly dipped below the $1.35 mark, nearing Friday's two-week low of $1.346, as investors absorbed weaker-than-anticipated PMI data and maintained caution regarding the UK’s fiscal outlook. The S&P Global PMI for September revealed a noticeable slowdown in the UK's private sector activity, falling short of market expectations. The services sector experienced slower growth, while the manufacturing sector continued to contract. Further exacerbating the situation, last week's data showed a substantial rise in public sector net borrowing in August, exceeding forecasts and increasing concerns ahead of the Autumn Budget in November. This increase occurs amid escalating global debt levels, which have recently driven 30-year gilt yields to unprecedented highs, potentially constraining the government's ability to introduce additional spending measures. The Bank of England recently held interest rates steady, adopting a cautious approach, with the markets currently anticipating the next rate cut to occur in 2026.
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