UK Services PMI Weakens – Pound Holds On

Britain’s services sector has significantly slowed down in August. The purchasing managers’ index dropped to 51.1 points, not too far from the contraction zone. GBP/USD manages to hold on to support for now.

Early expectations stood on a slide from 55.4 to 54.3 points, similar to figures seen in previous months. This disappointment is the lowest score since December (which saw a one time drop to contraction) and the biggest drop in years.

This completes the series of PMIs. The manufacturing sector is contracting, with the indicator standing below 50 points. The construction sector is still growing at a plausible pace.

GBP/USD started the week with a Sunday gap below the 1.62 line, and temporarily fell below support at 1.6110. After the actual result didn’t point to contraction, the pair managed to secure this line, at least for now.

Further support is at 1.60, followed by 1.5940. Resistance is now at 1.62.

Tomorrow we have another important release: manufacturing production. Note that today’s holiday in the US is likely to slow things down later in the day.