British Services PMI Leaps to 55.3 points, reflecting strong growth in this important sector.
Early expectations stood on a small tick down from 53.8 to 53.5 points. GBP/USD is now above 1.59 once again. The move already began before the release. Another typical leak?
This is certainly a positive sign for the British economy, as policymakers are trying to figure out the next steps: is inflation a threat that should be finally dealt with? Or is the economy still on fragile ground?
This important indicator strengthens the hawks. It joins previous PMIs which also exceeded expectations. Manufacturing PMI rose from 51.5 to 52.1 points, passing early expectations for a drop to 50.6.
The construction sector showed even stronger resilience: PMI leaped from 54.3 to 56.7 points, significantly exceeding the early predictions for a drop to 53.6 points.
It’s important to remember that these fresh and forward looking purchasing managers’ indices are in contrast with the recent GDP figures for Q4 2011, which showed that the British economy contracted by 0.3%.
GBP/USD slid from high ground above 1.60 earlier in the week following the more-hawkish-than-expected FOMC Meeting Minutes in the US. The internal protocols of the Federal Reserve showed that the tendency for additional Quantitative Easing is fading away, contrary to the thoughts of various market participants.
For technical levels, see the British pound forecast.