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Forex News: Pound Falls As U.K. Service Sector Growth Eases

Pound Falls As U.K. Service Sector Growth Eases To 16-Month Low

02/05/2018 - 05:31:00 (RTTNews)

(RTTNews) - The pound weakened against its major counterparts in early European deals on Monday, after a data showed that British service sector activity expanded at the slowest pace in nearly one-and-a-half years in January.

Survey data from IHS Markit showed that the IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index, dropped more-than-expected to 53.0 in January from 54.2 in December. It was forecast to fall to 54.0.

However, any reading above 50 indicates expansion in the sector.

European shares dropped on concerns over higher interest rates and as coalition negotiations between German Chancellor Angela Merkel's conservative party and the Social Democrats broke down over the weekend.

The currency has been trading in a negative territory in the Asian session, with the exception of the greenback.

The pound eased back to 155.03 against the yen, from a high of 155.55 hit at 5:15 pm ET. This may be compared to a 5-day low of 154.83 hit early in the session. The next possible support for the pound is seen around the 153.00 level.

Survey by IHS Markit showed that Japan's service sector activity expanded at a slightly faster pace in January.

The seasonally adjusted services purchasing managers' index, or PMI, rose to 51.9 in January from 51.1 in December.

The pound resumed its early slide against the franc, falling to a 6-day low of 1.3111. The pound is seen finding support around the 1.30 level.

The pound gave up some of its early gains against the greenback with the pair trading at 1.4122. This may be compared to a 6-day low of 1.4082 hit early in the Asian session. If the pound declines further, it may target support around the 1.39 region.

The U.K. currency dropped to 0.8837 against the euro, its lowest since January 19. This follows an advance to 0.8812 at 5:00 pm ET. On the downside, 0.90 is possibly seen as the next support level for the pound.

Final data from IHS Markit showed that the euro area economy expanded at the fastest pace pace since mid-2006 in January.

The final composite output index rose more than initially estimated to 58.8 in January from 58.1 in December. The flash score was 58.6.

Looking ahead, U.S. ISM non-manufacturing composite index for January is set for release in the New York session.

At 11:00 am ET, the European Central Bank President Mario Draghi will testify on the ECB's Annual Report for 2016 before the European Parliament in Strasbourg.

For comments and feedback: contact editorial@rttnews.com

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