British factories are doing better than forecast, which leaves the Bank of England's next move harder to call. The manufacturing purchasing managers' index (PMI), a monthly survey of factory buyers, read 52.8 in its flash estimate for October, up 0.9 points from 51.9 in September. FX.co reported that market expectations for the flash reading were 51.7, which puts the beat at 1.1 points.

Other recent surveys point the same way: services firms reported 53.1 for October against 51.8 expected, and construction reported 46.1 for September against 44.9 expected.

Against that sits a weaker position for households and the government. Household energy bills are set to reach a three-year high from October, and Chancellor Healey could not rule out tax rises at the October 28 budget. September's borrowing overshoot and higher debt forecasts from the Office for Budget Responsibility (OBR) add to the fiscal pressure.

Gilt yields are at multi-decade highs and traders are pricing four to five Bank of England rate rises through 2027, even though the Bank's own median forecasts have it holding rates through the second quarter of 2027. Firm factory data gives that bet more support, but strained households and public finances are why the Bank's path stays open rather than settled.

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