UK PMI falls
Sterling fell against the Euro after UK service sector PMI figure fell to 52.2 in September from 53.7 the previous month in August. In addition to the service sector, construction activity has also contracted in Britain for a second straight month in September as business morale held close to its lowest since Britain entered into recession in 2008. The Markit/CIPS construction purchasing managers’ index rose to 49.5 from 49.0 in August, a slightly smaller improvement than economists had forecast, however well below the 50 mark indicating contraction.
The weak outlook comes despite government efforts to boost the sector, with £10 billion of loan guarantees to build rented housing announced last month, on top of £40 billion of infrastructure guarantees and the Bank of England scheme to lower borrowing costs for households and smaller businesses.
However the US Dollar advanced against its top counterparts overnight as Asian stocks declined, driving demand for the go-to haven currency. China’s Non-manufacturing PMI print showed service-sector activity grew at the slowest pace in at least 19 months suggesting that the world second largest economy is experiencing a seventh straight quarter of slowing economy.
On the FX market, the Euro is currently trading $1.2905, little changed from late U.S. levels, having retreated from Tuesday’s highs after Spanish Prime Minister Mariano Rajoy said an aid request was not imminent. The GBP USD is trading at a range of 1.6087-1.6137.
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