Investing.com - The pound edged lower against the dollar and the euro on Thursday after data showing that U.K. service sector growth slowed to its weakest level in three years amid fears over the growing risk of Brexit.
GBP/USD hit lows of 1.4034 before recovering slightly to 1.4082.
The Markit services purchasing managers' index declined to 52.7 last month from January’s 55.6. Economists had expected the index to tick down to 55.1.
It was the lowest reading since March 2013.
New orders in the sector rose at the weakest pace since early 2013 and employment growth hit a two-and-a-half year low.
“Survey responses reveal that firms are worried about signs of faltering demand, but boardrooms have also become unsettled by concerns regarding the increased risk of Brexit,” Chris Williamson, Markit chief economist said.
“The extent of the slowdown will be a shock to policymakers and surely puts to bed any talk of the Bank of England raising interest rates,” he added.
The survey data came after similar surveys earlier in the week showed that activity in the U.K. manufacturing sector slumped to the lowest in almost three years last month, while construction sector growth slowed to 10-month lows.
The pound also dipped against the euro, with EUR/GBP easing up to highs of 0.7745.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady near one-month highs at 98.28.
The dollar received a boost after Wednesday’s ADP nonfarm payrolls report showed that the U.S. private sector added 214,000 new jobs last month, ahead of expectations for an increase of 190,000.
The upbeat data fueled hopes that Friday’s U.S. government nonfarm payrolls report would show similarly strong jobs growth.
Investors were also looking ahead to the Institute of Supply Management’s U.S. non-manufacturing index later in the day, with the employment component particularly in focus ahead of Friday’s government jobs report.