Breaking: GBP/USD breaches 1.2900 after UK Preliminary Services PMI disappoints with 58.3

• UK Manufacturing PMI rises to 55.3 in April, a big beat.
• Services PMI in the UK comes in at 58.3 in April, misses estimates.
• GBP/USD pierces through 1.2900 on mixed UK PMIs.  

The seasonally adjusted S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) rose to 55.3 in April versus 54.0 expected and 55.2 – in March’s final reading.

Meanwhile, the Preliminary UK Services Business Activity Index for April dropped sharply, arriving at 58.3 versus March’s final readout of 62.6 and 60.0 expected.

Chris Williamson, Chief Business Economist at S&P Global, commented on the survey

“The survey data signal a marked cooling in the pace of UK economic growth during April, caused by an abrupt slowing in demand. Orders received by manufacturers have almost stalled, driven by an increasing loss of exports, and growth of demand for services has slumped to among the weakest since the lockdowns of early 2021.”

“High prices and the associated rising cost of living were often cited as a principal cause of lower demand, with covid also continuing to affect many businesses. Brexit and transport delays were seen as having further impeded export sales, while the Ukraine war and Russian sanctions also led to lost overseas trade.”

FX implications

The slowest rise in UK private sector output for three months in April puts the BOE in a tricky position, exacerbating the pain in the GBP.

Therefore, GBP/USD accelerated its decline and briefly breached the 1.2900 level on the data release.

At the time of writing, the pair is trading at 1.2902, down roughly 1% on the day.