UK Final Services PMI beats estimates with 13.4 in April, GBP/USD stays below 1.25

The UK services sector activity contracted less-than-expected in the month of April, the final report from IHS Markit showed this Tuesday. 

The seasonally adjusted IHS Markit/CIPS UK Services Purchasing Managers’ Index (PMI) was revised higher to 13.4 in April versus 12.2 expected and a 12.3 – April’s first reading.

Key points

Record declines in activity, new work and employment.

Input costs fall for first time since survey began in 1996.

Business expectations up only fractionally since March.

Tim Moore, Economic Director at IHS Markit, which compiles the survey

“April's PMI data highlights that the downturn in the UK economy during the second quarter of 2020 will be far deeper and more widespread than anything seen in living memory.”

"Historical comparisons of the PMI with GDP indicate that the April survey reading is consistent with the economy falling at a quarterly rate of approximately 7%, but we expect the actual decline in GDP could be even greater, in part because the PMI excludes the vast majority of the self-employed and the retail sector.”

FX implications

The GBP bulls failed to benefit from the upward revision to the UK Services PMI for April, as GBP/USD reversed from 1.2470 region on the data release. The cable now trades at 1.2450, up 0.06% on the day.