British Pound Sterling, on Thursday, August 2, climbed to an 11-month high against the dollar after data from the services sector came in stronger than expected.
Having been trading around $1.3232 GBP=D3 before the data, sterling rose to as high as $1.3267 after its release, up a third of a percent on the day.
Against the euro, it climbed 0.4 percent to 89.25 pence. EURGBP=D3
The BoE looks set to keep interest rates at a record low once again, but investors are looking out for signs that it is getting nearer to raising rates for the first time in a decade.
With unemployment at a four-decade low and inflation above the Bank’s target, the case had seemed to be growing for the BoE to at least reverse the emergency 25 basis-point rate cut it made after last year’s shock vote to leave the European Union.
But a raft of weaker data since June has called that view into question, with recent figures showing the economy had its slowest growth since 2012 in the first half of this year. Inflation has also dipped, and growth in wages remains weak.
The purchasing managers’ index (PMI) survey for Britain’s dominant services industry, therefore, which showed a slight pick-up in July to 53.8, came as a relief to those worried about an economic slowdown.
“The trend for UK data recently has been more on the downbeat side and the overall structural direction looks a bit weaker…so that was an encouraging side that we got a beat,” said Mizuho’s head of hedge fund FX sales, Neil Jones.
“We’re still comfortably above the 50 level that separates growth from contraction.”
Jones said the services PMI in itself would not be in itself enough to affect the BoE’s vote on rates later on Thursday, but that it was a “key measure” that policymakers looked at.
