Purchasing Manager Index Services for the month of April have been released in the UK. The announced figure of 54.3 was not only lower than last month’s 57.1 but also lower than the 54.3 the analysts have estimated it would be. Given the last 3 days in the UK where weak PMI figures have been succeeding one another a much lower than expected figure could have been expected by a lot of players. Upon the announcement the Sterling dropped a near 40pips within a minute against the Dollar and is currently traded at 1.6484 recovering from that low it was generated. The Euro rose to a new 13 month high against the Sterling.
The PMI services show an indication of the economic situation in the services sector. It provides a general view of the condition of sales and employment. Despite the PMI services index not affecting the UK GDP as much as the PMI of Manufacturing it still generates volatility. Usually a value above 50 or a value higher than what expected would be associated by hawkish currency behavior.