UK services PMIs back to 50.0
A slightly better result in today's UK services PMI reading, which at 50.0 represents equilibrium in the sector, which represents the bulk of UK GDP (over 70%). In previous months, the index had dipped below this pivotal market to reflect a contraction in the service industry, but this latest number shows some stabilisation setting in.
Markit suggests this is down to sentiment to a large degree, as new orders have dropped again for the second consecutive month. In light of the ongoing uncertainty, since exacerbated by another general election, future readings will depend on how the next few months play out and whether the political backdrop can stabilise also.
This morning, GBP has been trading sideways for the most part, and we expect this to continue into early December and indeed into the elections on the 12th (of December). The dip under 1.2900 has seen Cable vaguely trying to test bids en route to 1.2800, but there seems to be limited conviction here as yet, with USD based factors likely to be more influential here.
EUR/GBP continues to trade up and down the 0.8600's, but seems to be more comfortable in the lower half given some modest optimism over the Tories retaining power and getting their EU deal through - eventually. This may well help support Cable into the 1.2750-1.2800 if we push down there again.