Pound Falls Sharply As U.K. Services PMI Shrinks To Record Low

The pound moved down against its major counterparts in the European session on Friday, as coronavirus cases exceeded one million worldwide and U.K. service sector activity slumped in March amid business shutdowns and order cancellations in response to the coronavirus pandemic.

Survey data from IHS Markit/CIPS showed that the U.K. services PMI fell to 34.5 in March from 53.2 in February. This was also weaker than the flash estimate of 35.7.

This reading was the lowest since the survey began in July 1996.

The composite output index dropped to 36.0 in March from 53.0 in February. The flash score was 37.1.

Weak Eurozone purchasing manager data rekindled recession concerns.

The IHS Markit eurozone services purchasing managers index slumped to a reading of 26.4 in March from 52.6 in February, the worst-ever reading in the history of the series, as the covid-19 pandemic and associated measures taken to contain the outbreak through Europe weighed heavily on business performance.

The pound fell to 132.95 against the yen, from a high of 134.09 set at 7:00 pm ET. The next likely support for the pound is seen around the 127.00 level.

The latest survey from Jibun Bank showed that the services sector in Japan continued to contract in March, and at a much steeper rate, with a services PMI score of 33.8.

That's down sharply from 46.8 in February, and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction.

The pound reached as low as 1.2262 against the greenback, representing a 3-day fall. This followed a high of 1.2403 hit at 5:45 pm ET. The pound may challenge support around the 1.19 level.

The U.K. currency depreciated to 1.1982 against the franc and 0.8803 against the euro, after rising to 1.2080 and 0.8740, respectively in previous deals. The pound is poised to test support around 1.15 against the franc and 0.90 against the euro.

Looking ahead, U.S. jobs data and ISM services PMI for March are scheduled for release in the New York session.