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  • UK Final Services PMI sees upward revision to 39.5 in February.
  • GBP/USD holds firmer just below 1.4000 on the UK data.
  • Eyes on the UK Budget ahead of US ADP, ISM Services PMI.

 

The UK services sector activity fell short of expectations in February, the final report from IHS Markit confirmed this Wednesday. 

The seasonally adjusted IHS Markit/CIPS UK Services Purchasing Managers’ Index (PMI) was revised higher to 49.5 in February versus 49.7 expected and a 49.7 – last month’s flash reading.

Key points

Business activity almost stable in second month of lockdown.

Slowest drop in staffing numbers since pandemic began.

Optimism continues to rise in response to vaccine roll out.

Tim Moore, Economics Director at IHS Markit, which compiles the survey

“UK service sector activity was relatively stable in February and so it appears that the third national lockdown has seen limited spillovers to parts of the economy beyond the scope of government-mandated closures. While customer-facing businesses continued to report severe constraints on activity due to the pandemic, there were signs of growth in technology and some business services after a disappointing start to 2021.”

“Tighter restrictions on international travel meant that export sales remained an area of weakness for the service economy. Survey respondents cited regulatory issues and supply disruption as factors holding back new business wins from EU customers, which more than offset the positive impact on overseas demand from the economic recovery in the US and Asia-Pacific.”

FX implications

GBP/USD remains unperturbed by the disappointing UK Services PMI, as it gains 0.29% on the day to trade at 1.3995, as of writing.

All eyes on the US ADP jobs data and ISM Services PMI for fresh impetus while the main event risk for the GBP traders is the UK Chancellor Rishi Sunak’s budget due to be announced around 1230 GMT.