UK PMIs to be consistent with moderate growth

UK August manufacturing (Tuesday; consensus: 51.9) and services (Thursday;consensus: 57.6) PMIs should be consistent with moderate economic growth. However, core inflation remains well below the BoE's 2% target (1.2% y/y in July), and downside risks have intensified recently as falling Chinese asset prices have raised questions about the health of the global economy. 

Furthermore, the overall policy mix in the UK remains tight, with GBP about 10% overvalued on a real effective exchange rate basis and fiscal policy consistent with reducing the fiscal deficit by 2.3 percentage points of GDP over the next two years. 

"We continue to think the BoE MPC is uncomfortable with recent sterling strength, and with the Bank Rate close to the effective lower bound, the risk of a more prolonged period of monetary policy accommodation has likely risen. As such, we continue to forecast only modest GBP outperformance versus the EUR and material GBPUSD depreciation", notes Barclays.