UK PMI services report missed it expectations printing at 52.2 versus 53.1 eyed sending cable back to the 1.6100 in morning London trade. Despite the weaker than expected headline reading the overall results were mixed with new orders expanding at their fastest pace since May but employment declining for the first time in 10 months.
The uptick in new business reflected the natural rebound in after the Olympics-related lull but companies chose not to expand payrolls as a number of panelists reported that operating conditions were challenging. Therefore growth rates of activity and new business remained below their historical averages.
The services PMI was the third consecutive miss in PMI readings this week suggesting that UK economy is clearly slowing into the start of fall as activity in all three sectors declined from the month prior. Cable slid towards the 1.6100 level in the aftermath of the report, but so far has found support at the figure in relatively muted European trade.
FX markets are likely to tread water until the North American open with traders looking for further clues to global growth from US ISM Services data and the ADP report. A miss on those numbers could exacerbate the risk aversion flows and send GBPUSD to possible test of 1.6050 as the day proceeds.