Stronger PMIs: Hawkish Tilt for BoE – Danske Bank on British Pound

The UK flash composite PMI rose to 53.1 in October. Danske Research Team highlights stronger flash PMIs, with new orders expanding at their fastest pace in over two years and employment returning to growth. However, input cost inflation reached its highest level since June. Despite some supply-chain distortions, the bank sees the release as tilting hawkish for the BoE before its November meeting.

Stronger data raises BoE tightening risk

"In the UK, the flash PMIs strengthened in October, with both services and manufacturing picking up. The composite rose to 53.1 from 52.0 as services increased to 53.1 from 52.1 and manufacturing edged up to 52.8 from 51.9."

"The details were also encouraging, with new orders growing at the fastest pace in over two years and employment returning to growth for the first time since September 2024."

"At the same time, input cost inflation rose to its highest level since June, mainly driven by higher energy, raw material and transport costs in manufacturing."

"However, part of the manufacturing gain reflected longer supplier delivery times, pointing to supply-chain disruptions rather than stronger demand. Overall, the print leans to the hawkish side for the BoE ahead of its November meeting."

"In the UK, the 2027 budget on Wednesday could gather attention ahead of the BoE's November meeting, as inflation concerns coupled with stronger growth could trigger a hike"

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Learn more.)