Sterling Drifts Lower Amid PMI Misses and Autumn Budget Risks

The UK's sterling has continued its gradual decline against the Eurozone, driven in part by weaker-than-expected PMI readings. While hard data for the UK has been firmer, the softer survey results have contributed to a widening divergence between the two economies. Against this backdrop, gilts have outperformed other sovereign markets, with yields rising as investors seek higher returns.

The Autumn Budget is set to become a key focal point for UK assets in the coming months, with Chancellor Healey facing pressure to balance fiscal policy with economic growth. Rising inflation and government borrowing have added to the complexity of this challenge, leaving markets on high alert for any signs of fiscal missteps.