GBP depreciated against most other major currencies in the European session on Friday after the July PMI data pointed to a significant deceleration in business activity growth across the UK private sector amid a renewed surge in COVID-19 cases.

The IHS Markit and CIPS reported that the UK Composite PMI fell to 57.7 in early July from 62.2 in the previous month. This was the lowest reading since the easing of lockdown restrictions started during March. Economists had forecast the indicator to decrease only to 61.7. The details of the report revealed that new orders rose at the slowest pace for five months, while employment growth eased to its weakest since March, the degree of confidence decreased to its lowest since October 2020 and input cost inflation hit a record high. 

According to Chris Williamson, Chief Business Economist at IHS Markit, the UK economy’s growth in July was stifled by the rising virus infections, which “subdued customer demand, disrupted supply chains and caused widespread staff shortages, and also cast a darkening shadow over the outlook”.