UK business confidence rises to five-month high, Lloyds survey shows

British businesses grew more confident in August than at any point since March, according to a Lloyds bank survey, adding to a run of data pointing to a firmer economic outlook.

The bank's monthly business confidence index rose 4 points to +53%, comfortably above its 12-month average of +47%. The improvement was broad-based. Optimism about the wider UK economy climbed 7 points to +49%, well ahead of its 12-month average of +37%. Confidence in firms' own trading outlook edged up 2 points to +58%, slightly above the past year's average of +56%.

Lloyds said the gains reflected stronger customer demand alongside greater optimism about the economy and firms' own prospects, factors that should support investment and growth plans.

The detail most likely to catch the attention of rate setters was the drop in pricing intentions. The share of firms planning to raise prices over the next 12 months fell 3 percentage points to 51%, its lowest since 2022. That decline suggests businesses see less need to pass cost pressures on to customers, even as confidence in demand improves, a combination typically viewed favourably from an inflation perspective.

Taken together, the August reading extends a period of improving sentiment among UK businesses and aligns with other recent indicators pointing to a firmer economic backdrop. The mix of rising confidence and cooling price-rise intentions offers a relatively encouraging signal for policymakers weighing support for growth against managing inflation. Businesses appear more assured about demand without needing to lean as heavily on price increases to protect margins.

The implications for GBP/USD hinge on whether the Bank of England views the survey as confirmation that inflation pressure is easing. Lower pricing intentions reduce the urgency for further tightening, and markets will watch for any dovish shift in BOE communication at the next policy meeting.