UK services businesses report record increase in costs and are downbeat about the future

As per the latest data from the Confederation of British Industry, published during Tuesday’s Asian session, Britain's services businesses reported a record increase in costs over the past three months and are downbeat about the future, as inflationary headwinds look set to squeeze demand further.

Following the data release, Charlotte Dendy, the CBI's head of economic surveys, said, "There are slim pickings for those looking for positive signals in the services sector over the last quarter. Just as rising inflation is hurting households and every business sector, the services industry is no different.”

Key findings (per Reuters)

The CBI's overall business optimism balance - which measures the difference between the percentage of firms who are upbeat and downbeat - sank to its weakest since May 2020, the height of the COVID-19 pandemic, for both consumer and business services.

Businesses sharply raised the prices they charged customers, by the most since 2006 in the consumer sector and by the most in more than 20 years for business and professional services companies, but profit margins still shrank, the CBI said.

GBP/USD prints mild gains

Despite the downbeat news, GBP/USD remains mildly bid near 1.1720 amid the broad US dollar weakness.