Sterling jumped on Tuesday after a survey showed companies in Britain’s
dominant services sector grew more quickly than expected in May after a
winter slump in early 2018.
But the mood concerning the pound’s outlook remained more downbeat
due to uncertainty surrounding Brexit and the Bank of England’s path for
monetary tightening.
After slumping 3.43 percent against a resurgent dollar in May, sterling has started June on the front foot, buoyed by data showing signs of a possible strengthening of the British economy after a sluggish first quarter.
The IHS Markit/CIPS services purchasing managers’ index (PMI) rose to a three-month high in May, better than forecast in a Reuters poll of economists.
That pushed sterling up against the dollar. It traded up half a percent on the day after the data at $1.3384 and was headed for its biggest daily rise in seven weeks. GBP=D3
Against the euro the pound also rose 0.4 percent to 87.43 pence. EURGBP=D3
Tuesday’s business survey — the third in as many days to show signs of renewed strength in the economy — could increase the chances of a Bank of England interest rate hike later this year.
Investors are pricing in a roughly 40 percent chance of the BoE raising borrowing costs in August - the next time it updates its economic forecasts.
After slumping 3.43 percent against a resurgent dollar in May, sterling has started June on the front foot, buoyed by data showing signs of a possible strengthening of the British economy after a sluggish first quarter.
The IHS Markit/CIPS services purchasing managers’ index (PMI) rose to a three-month high in May, better than forecast in a Reuters poll of economists.
That pushed sterling up against the dollar. It traded up half a percent on the day after the data at $1.3384 and was headed for its biggest daily rise in seven weeks. GBP=D3
Against the euro the pound also rose 0.4 percent to 87.43 pence. EURGBP=D3
Tuesday’s business survey — the third in as many days to show signs of renewed strength in the economy — could increase the chances of a Bank of England interest rate hike later this year.
Investors are pricing in a roughly 40 percent chance of the BoE raising borrowing costs in August - the next time it updates its economic forecasts.
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