Forex News – Sterling supported by higher than expected UK service sector PMI

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The United Kingdom’s service sector PMI reported better than expected numbers for November despite the euro zone’s weaker services PMI which was reported slightly before.

Britain’s PMI showed surprising resilience, giving a reading of 52.1 to beat analysts forecast of 50.5. This follows October’s reading of 51.3.

Any number above the key 50 level indicates expansion in the sector, and below 50 shows contraction. Euro zone service sector PMI showed contraction as the index remained below 50 for the second straight month.

The strength in the service sector counters the weakness in manufacturing and should allow mildly positive growth from the UK during the fourth quarter.

While the headline PMI reading was positive, a break down of the data shows that unemployment is still weak. The survey showed employers shed jobs at the fastest pace in more than a year, and did little to change the view that UK economic growth is faltering.

Sterling moved lower against the dollar based on this fact despite climbing to a day high of $1.5662 prior to the data. Traders say that the improved PMI had already been expected so after the news many preferred to take profits saying that the pound was seen vulnerable to developments in the euro zone debt crisis and an overall gloomy view of the UK economy.