EUR/GBP flows: GBP up as UK PMIs continue to outperform

Another strong UK PMI in contrast to the weaker reading in the Eurozone. We don’t have a huge amount of trust in the composite PMIs as a growth indicator, not least because they exclude retail and construction, which are both weak and being significantly affected by tight monetary policy. But the market will note the UK outperformance, and EUR/GBP may now push towards the 0.8550 area, even though there hasn’t been much initial reaction in UK short dated yields.