- Pound (GBP) falls for a fifth day
- Services PMI eases to 53.1
- Euro (EUR) rises as services PMI is upwardly revised
- ECB meeting minutes will be released shortly
The Pound Euro (GBP/EUR) exchange rate is falling for a fifth straight day. The pair was fell 0.03% yesterday, settling on Wednesday at €1.1674 and trading in a range between €1.1643 to €1.1669. At 10:00 UTC, GBP/EUR trades -0.07% at €1.1666.
The pound is coming under pressure after UK service sector activity grew at a slower pace in March raising expectations so the Bank of England could still be on track to cut interest rates as soon as June.
The UK services PMI was 53.1 in March, down from 53.8 in February and below the initial reading of 53.4. This marked a four-month low for the dominant UK service sector.
Service sector businesses increased prices at the slowest pace in six months, which will be welcomed news by the Bank of England, which has pointed out the sticky service sector inflation has been a hurdle for cutting interest rates.
UK composite PMI ticked down to 52.8 from 53 as it was supported by growth in the manufacturing sector.
The market is currently pricing in a 50/50 probability that the Bank of England could start cutting interest rates as soon as the June meeting. However, the first rate cut is fully priced in for August.
The euro is pushing higher after the services PMI was revised upward and ahead of the ECB meeting minutes.
The eurozone services PMI was upwardly revised to 51.5 in March from 50.2 in February and ahead of the preliminary reading of 51.1.
The stronger service sector helped the composite PMI, which is a good gauge for business activity, rise to 50.3 from 49.2. Strength in the service sector offset weakness in the manufacturing sector.
Attention will now turn to the ECB meeting minutes, which relate to the March meeting at which the central bank left interest rates on hold at the record-high 4% level, but ECB president Christine Lagarde hinted at a June rate cut.
Investors will be watching the minutes closely for further confirmation of June is the starting date for cutting interest rates. The same
