GBP/USD spikes to session highs as UK services PMI soars to 59.1
The pound traded higher on Tuesday morning supported by data on the UK services PMI underscoring solid services sector performance.
The British pound jumped to session highs against the US dollar on Tuesday supported by data released on the UK services sector, showing activity has undergone the fastest expansion inJuly since December 2013. The GBP/USD spiked to 1.6886 from 1.6849 before the data release. It was likely for the cable to get support at 1.6814, the August 1 low, and resistance at the July high of 1.6955.
The Services PMI soared to 59.1 last month, an eight-month high, following 57.7 for June. Economists’ expectations were for a slight uptick to 57.9. The report was released after Monday data showed a slight slowing in the UK building sector in July, and yet the rate was faster than expected. Both reports pointed out to the momentum gathered in the UK economic recovery.
Expectations that the Bank of England will rise its key interest rate before the end of 2014 became firmer after a recent statement by the BoE that the hike could occur sooner than markets anticipate, as long as the recovery is making progress. But still, at the conclusion of the bank’s monthly monetary policy review on Thursday, the central bank is expected to maintain rates on hold.
In the meantime, the dollar continued to be well bid below its recent highs, after the Friday US employment report showed that July was a month of a slight slowdown of jobs growth. Investors adjusted their expectations for a possible Fed rate hike to some point in the second half of 2015.
Later the same day the US was expected to release data regarding factory orders, and the Institute of Supply Management to bring out data on the growth in the services sector.
