UK Services Sector Weakened in July

Forex News

Business activity in the British services sector slowed last month, raising questions about the Bank of England's decision to raise interest rates. The IHS Markit/CIPS UK Services Purchasing Managers' Index (PMI) dropped to 53.5 in July from 55.1 in June and marked a three-month low. A survey also showed, that services companies in the UK hired staff in July at the weakest pace in just under two years.

Meanwhile, IHS Markit's all-sector PMI, which includes services as well as the manufacturing and construction sectors, fell to 53.8 in July from 55.0 in June.

Yesterday, the Bank of England raised interest rate from 0.5% to 0.75% on the back of a strong labor market and credit growth. The central bank said in a statement that if its macroeconomic forecasts proved right, the BoE would probably have to increase rates further, albeit gradually.

The UK central bank also said "that the economic outlook could be influenced significantly by the response of households, businesses and financial markets to developments related to the process of EU withdrawal."