Pound Vulnerable to Dovish Repricing Amid Softer UK Data

The British Pound has weakened due to broad Dollar strength and softer-than-expected UK economic data. According to Elias Haddad at Brown Brothers Harriman, GBP/USD is lower while EUR/GBP has gained some ground.

Haddad notes that the swaps curve implies about 100 bps of Bank of England (BoE) hikes to 4.75%, but he believes the BoE may not need to tighten as much as markets expect.

The UK's September Purchasing Managers' Index (PMI) fell to a three-month low at 51.7, missing consensus expectations of 52.0. The composite PMI dropped from 52.5 in August.