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July 2016

UK Services PMI fell to 47.4

Published: Friday 22 July 2016

UK Services PMI fell to 47.4 in July from an expected 48.9, this marks the lowest level since April 2009. Any reading below 50 indicates contraction. Manufacturing also declined from previous levels to 49.1. The pound dropped sharply as a result, from 1.2030 vs EUR down to where it is now 1.1870, and USD dropping 2 cents to 1.3080. Analysts are attributing the downturn to Brexit one way or another and some expect the outlook to worsen if the current slump continues. The PMI figures now increase the chances of some action by Carney, an interest rate cut in August seemingly the likely option. Chancellor Hammond, however, urged caution and said that the data is only reflective of low business confidence as we’re in a time of increased uncertainty. In other news, Canadian retail sales beat expectations at 0.9% so we saw a further drop for the pound here.