Ella 
Sterling is showing volatility as households face the burden of high inflation.
Inflation in the UK is sticky due to a tight labor market and 45 years of high food inflation.
Investors are turning their attention to the services PMI after the manufacturing PMI edged up.
Sterling is showing shaky moves around 1.2700 as investors await key services PMI numbers following better than expected manufacturing PMI figures. GBP/USD is directional as sentiment remains largely calm due to the US Independence Day holiday. Investors will be fully focused on interest rate guidance from Bank of England (BoE) policy makers.
The UK’s economic outlook remains solid as demand from households remains upbeat despite the Bank of England’s interest rate hike. And the problem or BoE policy makers and the UK government are rushing to the rescue as inflation looks extremely sticky at over 8.5% and tight monetary policy has failed to have the desired effect.
GBP remains sideways around 1.2700
Sterling has found strength as the UK’s economic outlook is improving despite the Bank of England raising interest rates.
The S&P manufacturing PMI for June in the UK was 46.5, higher than the consensus value and the previously released 46.2.
Manufacturing PMIs have been broadly and directly contracting for the past 11 months. A number below 50.0 is considered a generational contraction.
The Bank of England warned commercial banks on Monday they may be underestimating the risks to private equity and commodities markets at a time when rising interest rates could squeeze market liquidity, Reuters reported.
Bank of England Governor Andrew Bailey has consistently supported further rate hikes as the UK economy grapples with more persistent inflation.
Conversely, Bank of England policymaker Silvana Tenreyro is against further rate hikes because of the risk of having to make a sharp U-turn if policy is tightened any further.
