Any signs of weakness in UK PMIs and Retail Sales this week to amp up slowdown fears

News that the UK government borrowed more than expected in June has further raised fears that under-fire Chancellor Rachel Reeves will be forced into hiking taxes again in the autumn. Public sector net borrowing jumped to £20.7 billion last month, the second highest figure in the month of June since detailed records were first collected in 1993.

Sterling is holding up well against the US dollar, but fears over strained public finances, the growing likelihood of more tax bumps and its implications for the UK economy are weighing on the pound against the euro, with the GBP/USD pair back trading around the 1.15 level.

This week will be an important one in the UK, as the July PMI figures (Thursday) and June retail sales report (Friday) will provide us with timely gauges as to how Britain’s economy is performing under the looming threat of higher tax rates.

Any signs of weakness in the data would further fuel fears of a growth slowdown, and could act to keep sterling gains in check in the coming days.