British Pound (GBP) Exchange Rate Weakens after Services PMI Data
The British Pound exchange rate fell against a number of its currency peers on Thursday after a report showed that the UK’s dominant service sector expanded at a slower rate than expected.
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According to Markit’s Services Purchasing Managers Index, the service sector continued to expand steadily but growth had slowed to its lowest level in nine months.
The index weakened to 57.6 in March, weaker than the 58.2 figure recorded in February. Economists had been forecasting for a fall to 58.1
As with all PMI data, any figure that comes in above 50 indicates expansion whereas one below indicates a contraction.
“As a whole, we may be seeing a slight downturn trend at the start of this year, but we are hopeful that this healthy outlook is where we are now heading,” said David Noble, the CEO at the Chartered Institute of Purchasing and Supply.
The services sector’s employment index fell to 53.5 in March from 55.6, and new orders expanded at the slowest pace in 10 months; the business expectations index fell to its lowest since November.
A general softening in other sectors suggests that the UK economy’s recent strong push could be easing.
Following the data release the British Pound dropped against the Euro and other peers; the fall could be extended depending on the outcome of today’s European Central Bank policy meeting.
Economists will be looking for any signs that the ECB could be about to introduce stimulus measures to counter the threat of deflation in the Eurozone.