The pound is still weaker against the euro this morning and is trading around the same levels against the dollar. It pulled back slightly against the dollar yesterday, after dollar volatility following the unrest in Washington. Worries about the UK economy following the announcement of a national lockdown is keeping the pound weaker against the euro.
UK Services PMI was revised lower to 49.4 in December amid shrinking client demand and restrictions on trade due to the COVID-19 pandemic. Composite PMI, which combines manufacturing and services indexes, was also revised lower to 50.4 in December. This latest reading signalled a slight rise in private sector output, mainly supported by manufacturing production. In contrast, service sector activity decreased.
In his speech yesterday, Governor of the Bank of England, Andrew Bailey, welcomed the EU-UK trade deal, saying it is critical that the UK sees stronger conditions for investment after the pandemic. He also said that both sides should be able to come to an agreement on Financial Services by March, but warned against the UK becoming a “rule taker” from the EU.
