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UK private-sector activity returned to expansion in July, with the Flash Composite PMI rising to 52.1 from 49.3, its highest level in three months. Both manufacturing and services improved, marking the first expansion in overall business activity since April. The survey points to a firmer start to the third quarter, supported by stronger domestic demand and resilient export activity.

Manufacturing remained the standout performer. The Manufacturing Output Index climbed to 53.6 from 52.6, its highest level in 22 months, while the Manufacturing PMI edged up to 52.8 from 52.5. Services also returned to growth, with the Business Activity Index rising to 51.8 from 48.8, helped by warm weather, the FIFA World Cup and stronger domestic tourism. However, S&P Global noted that services growth remained relatively subdued as cost-of-living pressures continued to weigh on household spending, while part of the manufacturing strength reflected precautionary inventory building linked to Middle East-related supply chain disruptions.

The survey also pointed to easing price pressures as lower oil prices during the first half of July helped moderate input costs, reducing immediate pressure on Bank of England to tighten policy further. Nevertheless, inflation remained elevated due to the broader energy shock and supply constraints, while businesses continued to reduce headcount as higher costs weighed on hiring.

Business confidence improved during the survey period as geopolitical tensions temporarily eased, but renewed instability in the Middle East and rising oil prices could yet challenge both the inflation outlook and the durability of the recovery.

Economic Data

Key Takeaways

• UK Composite PMI rose from 49.3 to 52.1, moving back into expansion territory for the first time since April and signaling a stronger start to Q3.
• Manufacturing continued to outperform services, with the Manufacturing Output Index climbing to 53.6, its highest level in 22 months.
• Manufacturing PMI edged up from 52.5 to 52.8, indicating factory activity remained firmly in expansion.
• Services returned to growth, with the Business Activity Index rising from 48.8 to 51.8, supported by warm weather, the FIFA World Cup and stronger domestic holiday spending.
• Manufacturing growth was also supported by precautionary inventory building, as firms sought to mitigate supply chain risks linked to the Middle East conflict, raising questions about the sustainability of the recent factory rebound.
• Input cost inflation eased during the first half of July as oil prices softened, reducing immediate pressure on the Bank of England to tighten policy further.
• However, businesses continued to report elevated cost pressures, ongoing job losses and uncertainty related to energy markets and geopolitical tensions.
• Business optimism improved to its highest level in several months, though renewed increases in oil prices and shipping disruptions could quickly reverse recent gains.

Full UK PMI flash release here.

GBP/USD's break of 1.3339 support argues that rebound from 1.3139 has already completed at 1.3557 already. The corrective pattern from 1.3867 is extending with another falling leg. Intraday bias is back on the downside for 1.3139 support. On the upside, above 1.3394 minor resistance will turn intraday bias neutral first.

In the bigger picture, price actions from 1.3867 are a corrective pattern within the broader up trend from 1.0351 (2022 low). With 1.3008 support intact, medium term bullishness is maintained and break of 1.3867 is in favor for a later stage, towards 1.4248 key resistance (2021 high). However, firm break of 1.3008 will at least bring deeper fall to 38.2% retracement of 1.0351 to 1.3867 at 1.2524, with increased risk of bearish reversal.

Intraday bias in USD/CHF remains on the upside for 100% projection 0.7603 to 0.8041 from 0.7600 at 0.8198. Decisive break there will extend the rally from 0.7603 to 161.8% projection at 0.8469. On the downside, below 0.801012 minor support will turn intraday bias neutral first. But outlook will remain bullish as long as 0.8029 support holds, in case of retreat.

In the bigger picture, while a medium term bottom was formed at 0.7603, it's still early to call for bullish trend reversal. As long as 38.2% retracement of 0.9200 (2025 high) to 0.7603 at 0.8213 holds, the larger down trend could still continue through 0.7603 at a later stage. However, firm break of 0.7603 will argue that the trend has reversed and turn focus to 0.8332 support turned resistance (2023 low) for confirmation.

Intraday bias in AUD/USD stays neutral at this point. On the downside, firm break of 0.6964 support will indicate rejection by 38.2% retracement of 0.7277 to 0.6864 at 0.7022. Deeper fall should be seen to retest 0.6864 low. Meanwhile, sustained break of 0.7022 will suggest that fall from 0.7277 has completed and 0.6864, and target 61.8% retracement at 0.7119 next.

In the bigger picture, considering bearish divergence condition in D MACD, a medium term top could be formed at 0.7277 after failing to sustain above 61.8% retracement of 0.8006 (2021 high) to 0.5913 (2024 low) at 0.7206. Deeper fall could be seen to 38.2% retracement of 0.5913 to 0.7277 at 0.6756 as a correction. But strong support should be seen there to bring rebound. Consolidations would continue below 0.7277 for a while.

No change in USD/CAD's outlook and intraday bias remains neutral. On the upside, firm break of 1.4115 will suggest that pullback from 1.4247 has completed, ahead of 38.2% retracement of 1.3480 to 1.4247 at 1.3954. Retest of 1.4247 should be seen next. For now, outlook will remain bullish as long as 1.3954 holds, in case of another dip.

In the bigger picture, current development suggests that fall from 1.4791 has completed as a three wave correction to 1.3480. It's still early to judge if rise from there a corrective bounce, or resumption of the larger up trend from 1.2005 (2021 low). But in either case, retest of 1.4791 high should be seen next.

Eurozone business activity returned to expansion in July, with the Flash Composite PMI rising to 51.9 from 50.0, its highest level in five months and signaling the first increase in private-sector output in four months. The improvement was broad-based, driven by a rebound in services and a further acceleration in manufacturing, suggesting the economy has entered the third quarter on firmer footing after stagnating through much of Q2.

Manufacturing was the standout performer. The Manufacturing PMI rose to 52.0 from 51.4, while the Manufacturing Output Index climbed to 53.0 from 51.7, marking the strongest production growth since March 2022. Services also returned to expansion, with the Services PMI Business Activity Index rising to 51.6 from 49.4 after three consecutive months of contraction. According to S&P Global, stronger demand lifted activity across sectors and was accompanied by the first increase in employment this year, while business confidence improved to its highest level since February.

Regional performance also became more encouraging. Germany returned to growth for the first time in four months, with its Composite PMI rising to 51.2 from 49.5, supported by a surge in manufacturing where the output index jumped to 54.7, the highest in more than four years. France remained the weakest of the major economies, but its Composite PMI improved to 49.6 from 47.2, indicating that the downturn moderated considerably. Meanwhile, the rest of the Eurozone recorded its strongest expansion in eight months, pointing to a broader improvement beyond the region's two largest economies.

The survey also offered encouraging news on inflation. Input cost pressures eased to their lowest level since the outbreak of the Middle East conflict, helping moderate selling price inflation across both manufacturing and services. That should reduce immediate pressure on ECB to tighten policy further. Nevertheless, the outlook remains closely tied to developments in the Middle East. Renewed increases in oil prices and rising shipping disruptions could quickly revive inflationary pressures and disrupt supply chains, threatening what is still a fragile recovery.

Economic Data

Eurozone Flash PMI (July)

Germany Flash PMI (July)

France Flash PMI (July)

Key Takeaways

• Eurozone Composite PMI rose from 50.0 to 51.9, the highest in five months, signaling the first expansion in business activity in four months.
• Manufacturing remained the main growth engine, with the Manufacturing Output Index climbing to 53.0, the strongest reading since March 2022.
• Services also returned to expansion, with the Business Activity Index rising from 49.4 to 51.6 after three months of contraction.
• Germany returned to expansion for the first time in four months, driven by a sharp acceleration in manufacturing output to a 53-month high.
• France remained just below the 50 threshold, but the pace of contraction eased significantly as services stabilized.
• The broader euro area outside Germany and France recorded its strongest expansion in eight months, suggesting the recovery is becoming more widespread.
• Firms reported the first increase in employment this year, supported by stronger demand and improved business confidence.
• Input cost inflation eased to its lowest level since the Middle East conflict began, helping moderate selling price inflation and reducing immediate pressure on the ECB to tighten policy further.
• Rising oil prices and shipping disruptions linked to Middle East tensions remain the principal downside risk to the recovery, with renewed energy inflation capable of derailing the nascent rebound.

Full Eurozone PMI flash release here.

Intraday bias in GBP/JPY remains neutral as consolidations continue below 219.56. Downside of pullback should be contained by 216.39 support to bring rebound. On the upside, above 219.56 will extend larger up trend and target 220.90 fibonacci projection level next.

In the bigger picture, the long term up trend is in progress. Next target is 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. For now, outlook will remain bullish as long as 55 W EMA (now at 208.64) holds, in case of pullback.

Intraday bias in EUR/JPY remains on the upside for the moment. Current rally would target a retest on 187.93 high. However, as the rise from 182.01 is still viewed as a corrective move, upside should be limited by 187.93. On the downside, below 185.32 support will turn intraday bias neutral again.

In the bigger picture, uptrend from 114.42 (2020 low) is still expected to resume at a later stage to 78.6% projection of 124.37 (2022 low) to 175.41 (2025 high) from 154.77 at 194.88. However, sustained break of 55 W EMA (now at 180.15) will argue that it's already in a medium term down trend to 175.41 resistance turned support and below.

Breach of 0.8543 resistance suggests that a short term bottom was already formed at 0.8453, after hitting 61.8% retracement of 0.8221 to 0.8863 at 0.8466. Intraday bias is back on the upside for stronger rebound to 55 D EMA (now at 0.8589) and possibly above. But strong resistance should be seen from 0.8610 to limit upside. On the downside, below 0.8513 minor support will bring retest of 0.8453 low instead.

In the bigger picture, current development suggests that rise from 0.8221 (2024 low) has completed at 0.8863, just ahead of 38.2% retracement of 0.9267 (2025 high) to 0.8221 at 0.8867. Deeper fall would be seen back to 0.8221. For now, outlook will be neutral at best as long as 0.8610 support turned resistance hold.

EUR/AUD is staying in consolidations above 1.6256 and intraday bias remains neutral for the moment. Further fall is expected as long as 1.6419 resistance holds. Rebound from 1.6108 could have completed at 1.6617 already. Below 1.6256 will target a retest on 1.6108 low. Firm break there will resume larger down trend.

In the bigger picture, outlook will stay bearish as long as 1.6842 resistance holds. Fall from 1.8554 (2025 high) is expected to continue to 61.8% retracement of 1.4281 to 1.8554 at 1.5913. Decisive break there will pave the way back to 1.4281 (2022 low). However, firm break of 1.6842 should confirm medium term bottoming, and bring stronger rally.