FX round-up: Up hill, down dale for sterling after UK services data, ahead of Yellen

It was a case of up hill and down dale for sterling on key pairs come early Friday evening, with the currency having suffered on worse than expected services-sector data earlier in the session.

At 17:07 GMT, sterling was 0.15% down in the dale at $1.2249, and down 0.61% to $1.1604. The dollar-spot index was down 0.28% to $101.910 as traders look to Fed chair Janet Yellen's speech later.

To take note of, in remarks prepared for his own speech on Friday evening, the Fed's number two, Stanley Fischer, refrained from commenting on the immediate outlook for interest rates.

On the data front, UK's services purchasing-managers' index (PMI) for February was worse than expected, seeing sterling lower. The euro-zone's services PMI for February beat views.

"The pound slid against the euro and the dollar after UK service sector data fell short of expectations," said Jasper Lawler, senior market analyst at London Capital Group.

"The accompanying eight-and-a-half year high in input costs is fuelling the concern that higher prices will curtail consumption this year and slow UK economic growth," he said.

Michael Hewson, chief market analyst at CMC Markets UK, noted that the PMI data still remained firmly in positive territory, despite the slip for February.

"The numbers still show that the UK economy is on course to grow at 0.4% in Q1, which is a slowdown from the 0.7% seen in Q4, but also not surprising as the lagging effect of higher prices starts to weigh on consumer spending," added Hewson in a statement.

Sterling was flat on the aussie, down on the rand and yen, but managed somewhat laboured up-hill gains on the loonie and kiwi.

The dollar, meantime, was up against the aussie, loonie, kiwi and yen, but down against the rand and euro as the clock ticked down to Yellen's soapbox at 18:00 GMT.

The president of the Federal Reserve bank of Richmond, Jeffrey Lacker, on Friday emphasised the need to act "pre-emptively" to avoid unwanted instability in prices.

"Investors continue to scratch their heads at the speed of the sudden hawkish change of a number of previously dovish Fed officials," said Hewson.

"In this context it would be a major surprise if she were to push back against her (Yellen's) colleague's comments from earlier this week.

"It would also be enormously counterproductive in terms of how the market perceives any future market guidance this year."

Meantime, Lawler continued that the so-called "Three B's" -- Brexit, bills and the budget -- were on the UK agenda next week.

The Brexit Bill amendment voted on by the Lords to protect the rights of European citizens adds a little uncertainty but is unlikely to put the Prime Minister’s March deadline for Article 50 at risk.

Rebel Tories voting to force the government to give MPs and peers a "meaningful vote" on the outcome of negotiations with Brussels seemed unlikely.

"Were it to happen, it would make a 'hard Brexit' much less likely and should be positive for the British pound.