2020.03.0410:14:00UTC+00Pound Lower After Soft U.K. Services PMI

The pound was lower against its major counterparts during the early European trading session on Wednesday, after the UK service sector expanded at a slower pace in February largely due to negative impact on sales from the coronavirus outbreak.

Final survey data from IHS Markit showed that the services Purchasing Managers' Index dropped to 53.2 in February from 53.9 in January. The flash score was 53.3.

The composite output index posted 53.0 in February, down slightly from a 16-month high of 53.3 in January. This was below the flash estimate of 53.3.

Investors expect a rate reduction by the Bank of England later this month, after the Fed's surprise rate cut on Tuesday.

BoE Governor Mark Carney told lawmakers on Tuesday that the central bank is prepared to act to support the economy.

The pound retreated to 1.2772 against the greenback, after rising to 1.2831 at 6:00 pm ET. If the pound falls further, it is likely to test support around the 1.24 region.

The pound was trading at 137.56 against the yen, down from a high of 137.93 seen at 8:00 pm ET. Next key support for the pound is likely seen around the 135.00 level.

Survey data from IHS Markit showed that Japan's service sector contracted at the strongest rate since April 2014 as that the COVID-19 outbreak had squeezed tourism.

The au Jibun Bank services Purchasing Managers' Index fell to 46.8 in February from 51.0 in January.

The pound fell to 1.2182 against the franc for the first time since October 10. The pound is likely to face support around the 1.19 mark.

The pound held steady against the euro, after dropping to 0.8744 at 3:40 am ET. At yesterday's close, the pair was worth 0.8714.

Looking ahead, U.S. ADP private payrolls data for February is scheduled for release at 8:15 am ET.

At 10:00 am ET, the Bank of Canada announces decision on interest rates. Economists forecast the benchmark rate to be reduced to 1.25 percent from 1.75 percent.

In the New York session, U.S. ISM services PMI for February and Fed's Biege book report are set for release.