Pound Holds a Two-Day Drop as Services Fall More Than Forecastby
The pound held a two-day decline as a report showed U.K. services expanded last month at a slower pace, adding to signs that the possibility of a British exit from the European Union is harming the economy.
Sterling was little changed against the dollar after falling Wednesday to its lowest level in more than a week. Markit Economics said its services Purchasing Managers Index dropped to 52.3 in April from 53.7 a month earlier. While that’s above the 50 level that divides expansion from contraction, it’s below the 53.5 median forecast of economists in a Bloomberg survey.
The report is the latest to highlight how the June 23 referendum on EU membership is looming over the outlook for the U.K. Both the Treasury and the Bank of England have warned of negative consequences for the economy and financial stability if voters decide to leave the bloc. Sterling has weakened versus all of its Group-of-10 peers this year. An EU exit that disrupts the economy may prompt the BOE to keep interest rates at a record low for longer.
The pound was at $1.4513 as of 10:17 a.m. London time. It slid to $1.4462 on Wednesday, the lowest since April 25. Sterling strengthened for the first time in five days versus the euro, gaining 0.5 percent to 78.83 pence, having touched 79.47 pence a day earlier, the weakest since April 18.