The pound reapproached 31-year lows against the U.S. dollar on Tuesday, after the release of downbeat U.K. service sector data added to concerns over the effects of the Brexit vote on the British economy.
GBP/USD hit 1.3148 during European morning trade, the pair’s lowest since June 27; the pair subsequently consolidated at -, retreating -%.
Cable was likely to find support at 1.3118, the low of June 27 and a 31-year trough and resistance at 1.3339, Monday’s high.
Research group Markit said its U.K. services purchasing managers’ index dropped to 52.3 last month from a reading of 53.5 in May. Analysts had expected the index to rise to 52.5 in June.
Despite the fact that the service sector continued to expand, Markit pointed out that the growth over the second quarter as a whole was the slowest since the first quarter of 2013.
Markit also noted that 89% of the surveys were submitted before the Brexit vote.
Investors were still cautious as Britain’s shock decision to leave the European Union sparked uncertainty over the consequences of the U.K. vote on the country’s economy and the global economy as a whole.
On Monday, Nigel Farage, a leading proponent of the Brexit campaign, resigned as head of the U.K. Independence Party (UKIP) saying he'd "done his bit."
Market participants were looking ahead to the Bank of England’s financial stability report due later Tuesday for fresh clarity on the health of the U.K. banking sector in the wake of the Brexit vote.
Sterling was sharply lower against the euro, with EUR/GBP up 1.08% at a 21-month high of 0.8482.
Earlier Tuesday, Markit said its German services PMI rose to 53.7 in June from 53.2 in May, compared to expectations for an unchanged reading.
For the entire euro zone, the Markit services PMI rose to 52.8 last month from 52.4 in May, also condounding expectations for an unchanged reading.