In July there was a solid rebound in new work which led to higher levels of business activity. July’s UK services PMI edged up from June’s 50.2 to 51.4, signalling a modest increase in service sector growth. However, Sterling was left dampened as this figure was still far below the trend recorded since the economy began recovering from the global financial crisis. Commenting on the data, Group Director at the Chartered Institute of Procurement and Supply Duncan Brock noted: “While services activity grew in July, this marginal improvement on last month is a smokescreen. Fundamental weaknesses remain in a sector pinned down by Brexit uncertainty and increasingly stagnant global economic growth.
“New order growth rose modestly, however, the weakening pound was a boon to overseas customers, especially in the EU and US, as export orders rose to their highest levels since June 2018.”
Meanwhile, tensions between the US and China heightened after Beijing allowed the Chinese Yuan to slump below the seven-to-one dollar level.
This was the first time the pairing had fallen below this level since 2008.
Reports have suggested this move means China does not see a trade deal with the United States being reached anytime soon.
Commenting on this, currency strategist at Nomura in Tokyo, El Kaku noted: “It is not surprising if Beijing thinks they should weaken the yuan to negotiate with Trump when the US side is maxing out on tariffs. We expect the yuan to weaken to 7.2 this quarter.”
This comes just days after Trump threatened a further $300 billion worth of tariffs on Chinese imports.
The safe-haven US dollar received an upswing of support thanks to growing tensions, causing the GBP/USD exchange rate to slide.