Sterling Stumbles Following Weak UK PMI Services Report

Sterling is lower following a weaker than expected UK services PMI, losing just over 0.3% to the greenback in making a low at 1.5172. The pound has since settled around 1.5195, compared to pre-data levels just above 1.5220. Resistance on the currency pair is seen near the 20-day moving average at 1.5320, while support is seen near 1.5087. Momentum remains negative with the MACD (moving average convergence divergence) index printing in the red with a downward sloping trajectory.

The services PMI unexpectedly dove to a 29-month low of 53.3 in September, catching a number of traders off sides as the consensus forecast was for an increase to 55.9 from August’s 55.6. The components of the survey were discouraging, except employment growth, which was the best since June. The September composite PMI dipped to 53.3 from 55.1 in August, corroborating a picture of slowing economic growth momentum in Q3. The data should keep BoE tightening expectations at bay, even though Markit reported that salary pressure was lifting input prices.

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