U.K. June services PMI slipped marginally, to 51.6 from 51.7, better than our survey median for a decline to 51.5. Somewhat of a correction was expected, following May’s surge, as well as the decline to services PMIs in the Euro-Zone. However, the indicator shows that the sector is still expanding, which is encouraging, suggesting that the U.K. recession could soon be over, although the recovery is likely to be slow and fragile. Indeed, the new business index fell back to 49.7, below the 50-mark, from 51.8 in May, but the business expectations index was the highest since October 2007. Job cuts within the sector continued, however.
GBP found a modicum of support around 1.6340 after U.K. June services PMI held up, after showing only a slight deterioration to 51.6 versus 51.7 in May. This was a bit better than expected and indicated that the service sector is still experiencing an expansion, which will offer hopes that the U.K. recession is coming to an end. The break down indication that expectations remain highs, but new business and job cut continue within the sector and highlights that any recovery will be fragile and protracted.