U.K. services PMI falls to 16-month low in January

U.K.’s services PMI dropped in the month of January, disappointing consensus expectations. The headline IHS Markit Services PMI for U.K. dropped to 53 in January, a 16-month low, as compared with consensus expectations of a print of 54.2. However, the details had positive news. The flow of new business orders rose, while a gauge of outstanding work moved above 50. Additional new business and a backlog of outstanding work might stimulate activity in the coming months.

Several service sector companies emphasized Brexit-related uncertainty as being a main influence for client’s reduced appetite to spend, noted Lloyds Bank in a research report. But, there were also a few positive indications. Expectations regarding the future rose, with the increase attributed to more robust global economic conditions and the possible for the U.K.’s exit from the EU to provide greater opportunities. The rate of cost rises slowed in the January report as cheaper funding costs and successful negotiations with suppliers, counters the effect of higher salary settlements.

The drop in services PMI, along with the declines in sentiment in manufacturing and construction in January, signifies that the composite PMI dropped to 53.5 in January from December’s 54.9. This indicates towards a widespread moderation in the rate of economic activity at the beginning of 2018, stated Lloyds Bank.

At 12:00 GMT the FxWirePro's Hourly Strength Index of British Pound was highly bearish -152.27, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 160.51. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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