What did the PMI survey indicate about UK business activity?

The PMI survey showed that British business activity slowed in early September, with the Composite Purchasing Managers' Index falling to 51.0 from 53.5 in August.

What are the expectations for the Bank of England's interest rates?

Markets are pricing in just 7 basis points of Bank of England cuts by year-end, suggesting potential for sterling weakness.

What is the current sentiment towards UK equities?

Despite the sluggish economic data, UK equities are near record highs, indicating upbeat investor sentiment.

What pressure is Finance Minister Rachel Reeves facing?

Finance Minister Rachel Reeves is under pressure to maintain fiscal discipline, which may lead to new tax increases in her upcoming budget.

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Home > Finance > Sterling dips after gloomy PMI surveys

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Sterling dips after gloomy PMI surveys

Q: How did Sterling perform against the dollar after the survey?

Sterling fell as much as 0.2% to a session low of $1.34885 immediately after the survey, before recovering to around $1.35.

Published by Global Banking & Finance Review®

Posted on September 23, 2025

2 min read

Last updated: January 21, 2026

Sterling dips after gloomy PMI surveys - Finance news and analysis from Global Banking & Finance Review

Pound Weakens Following Disappointing UK Business Activity Data

By Amanda Cooper

LONDON (Reuters) -The pound sagged on Tuesday after a survey showed British business activity slowed in early September, as companies reported a loss of momentum and confidence given the rising risk of tax increases later this year.

S&P Global's preliminary UK Composite Purchasing Managers' Index, covering the services and manufacturing sectors, slowed to 51.0 in September from 53.5 in August, not far above the 50.0 level that separates growth from contraction.

Economists polled by Reuters had forecast a more modest fall to 53.0 in Tuesday's survey.

Sterling fell as much as 0.2% on the day to a session low of $1.34885 immediately after the survey, before tracking back to around $1.35.

It is still up around 8% against the dollar this year and nearly 5.5% against the euro, which on Tuesday traded 0.13% higher at 87.41 pence.

Strategists at BBVA noted the pound is struggling to gain much traction, even with upbeat investor sentiment and UK equities near record highs.

"We continue to see scope for sterling weakness: with markets pricing in just 7 basis points of BoE cuts by year-end, euro/sterling has upside potential. We think a BoE rate cut in the next two meetings is likely," they said.

Part of the pound's relative resilience against the dollar in the face of deteriorating UK data is the expectation that the Bank of England will take longer to lower rates than the Fed, given British inflation is running at almost 4%, nearly twice the central bank's target.

Currency volatility generally was muted ahead of planned remarks later from Federal Reserve Chair Jerome Powell.

Powell is expected to reiterate the need for caution in cutting rates, a view a number of Fed officials expressed on Monday, in contrast to new Fed Governor Stephen Miran - a pick by President Donald Trump for his views on the need for lower rates - who said the central bank is misreading how tightly it has set monetary policy and risks undermining the labour market.

Back in the UK, finance minister Rachel Reeves is under growing pressure to keep Britain's finances in check, which could result in new tax rises in her budget in November.

(Reporting by Amanda Cooper; Editing by Sharon Singleton)

Sterling dips after gloomy PMI surveys

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Pound Weakens Following Disappointing UK Business Activity Data

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