Pound Erases Losses as PMI Points to UK Return to Economic Growth
THE TAKEAWAY: UK PMI for services beats expectations at 52.4 in March -> Markit projects UK economic growth in Q1 -> Pound erases some earlier losses
The threat of a triple dip technical recession in the United Kingdom waned today, as the UK PMI for services rose to a surprising seven month high. The UK PMI for services was reported at 52.4 in March, beating expectations for 51.5 and higher than 51.8 in February’s PMI.
March saw a marked rise in new services business, leading to increased service sector output. There also was a small rise in employment in the services sector. Business sentiment among service providers rose to the highest level since May.
Markit said the rise in the services PMI may have saved the UK from entering a technical triple dip recession, following the 0.3% GDP decline in Q4. Chief Economist Chris Williamson wrote in the release, “with growth of the service sector offsetting contractions in manufacturing and construction, the PMI survey data collectively point to the economy having grown by a mere 0.1% in the first three months of the year.”
The Pound rose about thirty points against the US Dollar in the minutes leading into the better than expected release, and Cable is trading slightly below 1.5070 at the time of this writing. The pair fell about 100 points earlier in the session, possibly on US Dollar strength from the selloff in Yen after the BoJ announcement. GBP/USD may next see support by the key 1.5000 line, and resistance may continue to be provided at 1.5200.
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GBPUSD Daily: April 04, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to email@example.com .