US Dollar to Pound Sterling (USD/GBP) Exchange Rate mixed as US service sector stumbles

The US Dollar was mixed against its most traded peers on Monday after data released by Markit showed that growth in the US service sector slowed in February as the harsh winter weather weighed upon economic activity.

Markit’s preliminary service sector purchasing managers index declined to 52.7 in February, down from the previous month’s figure of 56.7. The figure may have softened but the sector was still expanding. Any figure above 50 indicates expansion.

The report also showed that employers continued to create new jobs in the sector, but at the slowest pace recorded in almost a year. The employment section was at its lowest level since March last year. The report showed that new hiring came in at 52.0, down from 54.1 in January.

The last few weeks has seen most US data releases come in weaker than forecast as a result of the winter weather. Economists have chosen to widely ignore the figures as they believe that once the weather improves the US economic recovery will continue to strengthen.

“The unusually severe winter weather undoubtedly looks to have taken its toll on the economy in the first quarter. However companies clearly remained in expansion mode, with just over half of all firms expecting activity to rise over the coming year against just 3% expecting a decline,” said Chris Williams, chief economist at Markit.

The US Dollar strengthened against the Euro after the single currency eased after European Central Bank President Mario Draghi reiterated a willingness to add to stimulus measures in order to stave off deflation.

The Pound was supported by comments made by Bank of England Governor Mark Carney who said that the BOE will continue to support the UK’s economic recovery.

The US Dollar could experience some volatility on Tuesday if consumer confidence data comes in below expectations.