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Sterling edges lower ahead of UK services PMI data
[LONDON] Sterling edged lower against the US dollar on Friday, trading just off a 6-week low ahead of an industry survey expected to confirm a slowing in Britain's dominant services sector ahead of the launch of European Union exit talks this month.
Sterling has fallen sharply this week, breaking through support around US$1.24 and then US$1.23 as data suggested investment and the economy at large was finally beginning to slow in the face of the aftermath of last year's Brexit vote.
Friday's survey of purchasing managers in the UK's services sector will be closely watched for signs the sector that contributes nearly 80 per cent of the country's economic output is slowing further.
A Reuters poll shows expectations of a dip in the Markit/CIPS services PMI index to 54.1 after its first fall in four months in January.
A survey on Thursday showed Britain's construction industry picking up in February, but with the pace of new orders slowing.
"Today's UK services PMI should prove an important market mover, especially if details support the view of easing price pressures as for instance seen with this week's manufacturing PMI," Credit Agricole AIB said in a note to clients. "Any such indication would pressure medium-term inflation expectations even further, supporting the view that the BoE can stick to a dovish monetary policy stance for longer."
The pound traded 0.1 per cent lower to the US dollar at US$1.2255 at 0849 GMT. It was also lower 0.2 per cent at 85.80 pence per euro.
Sterling has lost almost a fifth of its value since Britain voted to leave to the European Union last June, with worries about a fresh Scottish independence referendum and a dollar boosted by US interest rate hike expectations this week pushing the pound to a six-week low on Thursday.
Prime Minister Theresa May is expected to lay into the governing record of the Scottish National Party, which has a majority in Edinburgh's devolved parliament and is considering calling a fresh independence vote, in a speech in Glasgow on Friday.