GBP flows: GBP firm as UK PMI outperforms

UK PMI comes in broadly as expected, but relatively strong compared to the Eurozone. EUR/GBP is consequently once more pressing on the 0.84 level. While the UK PMI doesn’t have a particularly strong track record as a contemporaneous indicator of GDP, the data is likely to prevent any unwinding of the big long GBP positions that have been established in the last few months. Nevertheless, progress below 0.84 is likely to prove difficult unless there are some clearly hawkish BoE MPC comments ahead of the August MPC meeting.