UK: Flash Services PMI falls to 24-month lows in January, GBP/USD loses 45 pips

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  • UK manufacturing PMI improves to 46.7 in January, a positive surprise.
  • The UK services PMI came in at 48.0 in January, which is a big disappointment.
  • The GBP/USD pair falls and tests the 1.2350 level after the mixed results of the British PMIs.

The UK’s S&P Global/CIPS Manufacturing Index unexpectedly improved to 46.7 in January, from 45.0 expected and 45.3 in the final reading for December. Although it is still in contraction territory, this is its best result in four months.

For its part, the preliminary index of business activity in the UK service sector for January stood at 48.0, below the 49.9 in December and the estimate, which coincided with this figure. This is the worst result seen in 24 months.

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According to S&P Global, data for January highlighted a sustained decline in UK private sector business activity. Although only modest, the overall rate of decline accelerated to its fastest level in two years. The service providers experienced a marked loss of momentum since December, with respondents citing higher interest rates and low consumer confidence as key factors holding back activity commercial.

GBP/USD reaction

The pound has reacted to the data with a sharp 45 pip decline against the dollar, posting fresh daily lows at 1.2332. At time of writing, GBP/USD is trading above 1.2338, shedding 0.28% daily.

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Source: Fx Street

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