6th January 2015
The pound has fallen to a 17-month low against the US dollar following the release of a key economic index which pointed to a slowdown at the end of 2014.
Markit’s Purchasing Managers’ Index reading was 55.8 for December, below the 58.6 figure for November and the lowest registered in 19 months.
However, any figure over 50 shows economic expansion and growth in the services sector was still above trend and near to pre-crisis levels.
Immediately after the news, Sterling fell to $1.518 – its lowest level since August 2013.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “The markedly softer services survey completed a hat-trick of weaker purchasing managers’ releases for December.
“While the surveys still point to very respectable growth overall, they suggest that GDP growth slowed further in the fourth quarter after moderating to 0.7% quarter-on-quarter in the third quarter from 0.8% quarter-on-quarter in the second quarter.
“We currently forecast GDP growth of 0.6% quarter-on-quarter in the fourth quarter but the purchasing managers’ surveys suggest growth could have been around 0.5% quarter-on-quarter.”