U.K. Services Falls to Record Low, Pound-Dollar Rebounds From Intraday Low

The U.K. Services PMI contracted for the fifth straight month, falling to a fresh record low of 46.0 from 49.2 in August. Earlier this week, we saw the manufacturing PMI slip to a record low reading of 41.0 from a revised reading of 45.3. The data suggests that the downturn in Europe’s second largest economy will only get worse as services and manufacturing activity deteriorates. Meanwhile, the BoE Housing Equity Withdrawal index slipped to -2.8B from 5.0B in the first quarter, which was the first negative reading in nearly a decade. The pound-dollar however, recovered from Thursday's lows, with Cable spending a period of time above the 1.7700 handle, while EUR-GBP remained heavy after a broadly softer euro sent the cross down to 0.7814 lows. However, sterling is expected to remain soft, with U.K. economic data continuing to indicate a deterioration in economic conditions. Cable met sellers from 1.7725 and EUR-GBP is supported ahead of the 0.7800 handle as the market prices in a BoE rate cut.