UK Services Head Toward Contraction - FX Leaders News
The trend is strongly bearish for UK services PMI

UK Services Head Toward Contraction

Posted Wednesday, December 5, 2018 by
Skerdian Meta • 1 min read

Yesterday, the UK manufacturing report came surprisingly strong at 53.4 PMI points, which is the strongest reading since August. That gave the market the idea that the services report today was going to be positive, or at least not too horrible.

But the services PMI report today was horrible actually. The headline number came at 50.4 points, down from 52.2 points previously and against 52.5 points expected. This is the weakest reading since July 2016. The composite PMI came at 50.7 points against 52.1 points expected. The composite number is also the weakest since July 2016.

But it gets worse. Business expectations fell to 60.6 in November from 63.1 in October. This is the second weakest reading since the financial crisis a decade ago. The services sector is by far the most important sector of the British economy, so it has a great impact on the GDP.

After today’s services numbers, the GDP for Q4 is set to increase by only 0.1%. Well, it’s not that bad. I was expecting a flat GDP in Q4 or even a slight contraction. The GBP doesn’t care much to be honest. It ignored this report completely but I don’t blame it as the Brexit saga gets closer to the end.

Next week we have the Parliament vote on Theresa May’s Brexit deal, so everyone is concentrated in politics regarding the GBP right now.

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About the author

Skerdian Meta is our Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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