::: Cable Extends Declines Following Weak UK Service Sector Expansion

03 May 2012 09:07 GMT THE TAKEAWAY: UK PMI Services comes in at 53.3 for April, less than 54.1 expected -> Gains in new business in the service sector were outweighed by growing margins -> Cable rises, but sterling takes gains against euro UK Purchase Manager Index for Services came in at 53.3 for April, it’s lowest point in 2012 and well below analysts’ 54.1 expectations. The index result is still above 50 and therefore signals continued growth in the service sector, but it is lower than last month’s 55.3 result. The PMI has remained positive for 16 consecutive months, but April’s expansion was the weakest since November.
Service sector managers’ expectations remained high in April as there were gains in new business; however the margins for business rose as input costs went up and output charges remained the same when compared to March.
The PMI service is a survey based on material purchases in the service industry and managers’ expectations for the future; the index can be seen as a good gauge for the economy on whole, as services provide for 75% of the UK’s output. April’s PMI manufacturing result was also weak and the UK has entered a technical recession following last quarter’s lower GDP.
 Cable fell following the PMI release, continuing an earlier session drop from the 1.6200 level. However, sterling gained against the euro following the index news, possibly the result of further risk-off sentiment.

_-_ Cable retreats after report of the slowdown in manufacturing growth signals United Kingdom

May 1, 2012 09: 11 GMT  the takeaway: UK PMI manufacturing comes to 50.5, below expected 51.5-> slows the growth of production can be contributed to the sharp decline in new export-> cable return from six months of high dropsIndex of the United Kingdom purchase managers for the manufacture of April reached 50.5, below expectations of analysts of 51.5, export of new orders were at their steepest rate since May 2009. Although the PMI is always greater than 50 and therefore considered positive, the index is low the month 51.9 last revised level.
New export orders fell because of weaker demand from continental Europe, the United States and Asia. Higher prices contributed to the decline of manufacturing in the second half of 2011, which means that the industrial recovery could be slow for some time.
PMI is a gauge that weighs the activity of production and prospects for the future. The Institute approved for purchasing and supply and Markit Economics communicates the monthly index, which is based on a survey of executives in the private sector.
It is the fifth straight month the PMI manufacturing came in above 50, signalling expansion. However, the slowdown in manufacturing growth comes a few days after a technical recession was launched in the United Kingdom when GDP was lowest reported for 2 quarters in a row.

Cable fell sharply after weak manufacturing data, falling back below the 1.6200. Yesterday, the couple made a new six-month high just below 1.6300, but retracted earlier today. EUR/GBP has continued its rise higher after the PMI publication, also stimulated by the Euro already climbing.

DailyFX provides news forex and technical analysis on trends affecting the global currency.
Learn forex trading with a free practice account and FXCM maps.

May 1, 2012 09: 11 GMT

Worse than Expected UK Growth Means Higher Chance of Cable Turnaround

28 March 2012 09:14 GMT  THE TAKEAWAY: UK GDP numbers weaker than expected -> speculation of further easing also weakening Sterling on fundamental side -> Cable drops 30 points despite optimistic official comments on Q1 2012 growth
The economy of Great Britain shrank 0.3% during 2012’s last quarter, the UK stats bureau said today in a release. The contraction was more severe than the forecasted 0.2% drop. The economy grew 0.5% when compared to the previous year, compared to 0.7% predicted.
Losses in the services sectors propelled the GDP pullback, a breakdown of the data showed. Particularly, rising fuel prices propelled an output decline in the air travel industry. Despite recent initial indications that Q1 2012 numbers would be better, speculation that the Bank of England will support another increase in quantitative easing continues to encourage downside risk in Sterling.
Board members voted unanimously to keep rates at ultralow levels, the most recent BOE minutes revealed, those who supported increasing quantitative easing but were outvoted 7-2. A majority of BOE members said increased quantitative easing would send a message that the economy is worse than it actually is; however, dovish board members Miles and Posen argued that more is needed to maintain the economy's supply capacity. Cable declined 30 points on the less that stellar GDP numbers, breaking through multi session support at 1.5922 to reach a session low by 1.5900.
Cable declined 30 points on the less that stellar GDP numbers, breaking through multi session support at 1.5922 to reach a session low by 1.5900.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and charts from FXCM.
28 March 2012 09:14 GMT