EUR, GBP flows: GBP resilient despite weaker PMI

UK PMI also dip lower in September, but after a brief rally in EUR/GBP after the data, we have seen fresh lows. This may reflect the fact that despite the dip in the UK index, it remains substantially above the Eurozone index. We remain somewhat sceptical about the accuracy of the UK data, with the strength in the manufacturing PMI this year in particular having little correlation with the actual manufacturing output data, and GBP looks expensive against the EUR here both in absolute terms and relative to the recent moves in yield spreads. We would look for EUR/GBP to bottom out above 0.83.