GBP fell against other major currencies in the European session on Tuesday as investors digested the preliminary UK PMI data, which unveiled a deeper-than-feared contraction in Britain’s business activity in January.
S&P Global reported that its preliminary estimates showed the UK composite PMI fell to 47.8 in January 2023 from 49.0 in December 2022, pointing to the sharpest decline in business activity since the national lockdown imposed in January 2021. That surprised economists, expecting the indicator to inch up to 49.1. The main driver behind the miss was a bigger-than-anticipated decline in the service sector’s activity (UK services PMI dropped to 48.0 in January from 49.9 in the previous month versus economists’ forecasts of 49.7). Meanwhile, the factory activity saw a better -than-expected improvement but remained in contraction territory (UK manufacturing PMI rose to 46.7 from 45.3 versus economists’ expectations of 45.5).