Britain’s economy has slowed this month due to the resurgence of the coronavirus pandemic and will most likely damage businesses and transport sectors.
An early “flash” regarding of the HIS Markit/CIPS UK Composite Purchasing Managers’ Index (PMI), a gauge of private sector growth, fell to a four-month low of 52.9 in October from 56.5 in September.
“The pace of UK economic growth slowed in October to the weakest since the recovery from the national COVID-19 lockdown began,” HIS Markit economist Chris Wiliamson said.
“The weaking is most pronounced in the hospitality and transport sectors, as firms reported falling demand due to renewed lockdown measures and customers being deterred by worries over rising case number,” he added.
Britain’s economy shrank 20% in the second quarter, the largest decline of any major advanced economy, and official data has shown that the initially rapid recovery was already beginning to falter in August.
Since then COVID cases have risen sharply, and on Thursday finance minister Rishi Sunak was forced to expand support for businesses struggling to pay their staff at a time when he had hoped to wean firms off state support.
New orders across British businesses fell in October for the first time since June, survey compiler IHS Markit said.
The services PMI, which covers the bulk of the economy, fell to 52.3 in October from 56.1 in September, its lowest level since June. The survey pointed to a month of heavy job losses.
The performance of the much smaller manufacturing sector was better, although similarly marked by a sharp drop in employment.
The factory PMI fell to 53.3 from 54.1, its lowest since July, though optimism about future output stuck a five-year high in October.
In the daily charts of GBP/USD, the pair edged lower early Monday morning in Sydney session.
The uncertainty in the market of U.S. dollar has kept traders on their toes since this morning. As the U.S. Presidential Elections are fast approaching, the direction of the dollar is getting harder and harder to predict.
With analysts saying that a Joe Biden victory will damage the dollar, will this sentiment affect the market days ahead of the elections?
As what we can see in the charts, the pair is still trading inside the area of support and resistance levels. The uncertainty in the U.S. dollar has pushed the dollar higher and further pushing the sterling lower.
With the resurgence of COVID-19 in the UK and other Euro areas, will the sterling head lower in the following days or will the Brexit negotiations help the sterling back up?
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