United Kingdom Services PMI Falls to 53.8 in November; GBP Down Over 0.50%

The United Kingdom services PMI fell to 53.8 in November, lower than the Reuters’ median consensus of 55, down from October’s 55.6. However, activity in UK’s dominant service sector remained above the 50-mark for16 straight months, whichdivide growth from contraction.It appears that rise in prices hascrimped demand for services, which is impacting the pace of activity.
On the otherhand, it isworth noting that deceleration in the dominant service sectorhas been accompanied by rising prices, which means inflation is expected to balloon further in the near-term. This would create more difficulties for the Bank of England to keep monetary policy-setting balanced to support growth and control inflation at the same time. The central bank is already struggling with weak consumerspending which is dragging economic growth. On the currency side, this should be interpreted asbearish for the Brtish pound. Meanwhile, the GBP/USD continued to drift lower, trading 0.51% down at 1.3411 by 0.9:40GMT.

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