Weak PMI data hits pound

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The pound has come under pressure today against its US counterpart on the back of poor local data as traders gear up for Thursday’s interest rate decision from the Bank of England.

At 8.02pm (GMT) the British currency was trading at US$1.3190 down from US$1.3222 at close of trade on Friday.

Markit services PMI figures from the UK released today came in 48.2 against last month’s figure of 52.4 marking its biggest fall in 3 years which many attribute to the decision to leave the Eurozone.

A number below 50 show the sector is in contraction mode.

“Though these falls were not as marked as those seen during the Great Recession in 2007-2008, the drop was harsher than expected” said David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement and Supply.

“The overall index was at its lowest since February 2013 and lower than reported by the recent flash PMI, which measured the effect of continuing uncertainty and the immediate impact of the EU referendum on the UK economy," he added.

The sector is likely to experience further downward pressure according to Mr. Noble due to a further lack of orders,

"Without new orders coming through, this downward trajectory is likely to get worse, at least in the short term” he said

The data is also likely to help guarantee a rate cut from 0.50 percent to 0.25 percent from the BOE on Thursday when they release their latest interest rate decision.

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