UK services PMI was expected to print at 49.7 and it managed to print at 50.0 to push up in expansionary territory (prev 49.5). IHS market say that this reading is in line with its GDP tracker which shows GDP declining at a quarterly rate of 0.1%. New business fell for the second month running, nevertheless, the reading still beat the consensus estimates.
The UK services sector is the biggest contributor to GDP in the nation. This makes the services PMI number very important. In countries like China and Australia Manufacturing PMI may be the biggest indicator of economic health but in the UK its services. Any number above 50 indicates expansion and below 50 means contraction.
Leading into the number there was some weakness in GBP. GBP/USD was trading just under the 1.29 area. On the higher timeframes (4hr) the level to watch is the consolidation low of 1.2787. Yesterday GBP/USD was pretty bearish and lost around 0.42% as some USD strength kicked into the markets.
In a reaction to the data GBP/USD ticked slightly higher off its daily lows of around 1.2874 but as of yet, there has been no real follow-through in the move higher.
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