Yesterday’s surprisingly strong UK construction PMI, which followed Monday’s better-than-forecast manufacturing PMI, supported the Pound and helped it achieve a three-month high against the Euro during the local session and post a third day of gains against the US Dollar.
The British asset was little changed as European trading began, but with a third piece of UK sector data smashing expectations Sterling is likely to extend gains ahead of tomorrow’s Bank of England Rate decision.
The Pound Sterling to Euro Exchange Rate was in the region of 1.1833 as of 10:05 GMT
1 Euro is currently worth 0.8548 pence
While economists expected the gauge of services to slip modestly from the 60.2 level recorded in July to 59.7 in August, it actually rose to 60.5 – pushing further away from the 50 mark separating growth from contraction.
The acceleration in activity was the sharpest recorded since the close of 2006, with new business growth at its strongest level for over sixteen years.
In a statement issued with the report senior Markit economist Paul Smith observed: ‘The UK service sector turned in another stellar performance in August, building on the growth momentum seen during July […] With sister surveys for construction and manufacturing also signalling the continuation of substantial growth, the UK is well on course to register a strengthening of GDP growth over Q3 as a whole following the 0.7 per cent QoQ increase in Q2.’
The GBP/EUR exchange rate hit a high of 1.1846
Similarly, David Noble of the Chartered Institute of Purchasing and Supply asserted: ‘Optimism abounds as the UK services sector, combined with manufacturing and construction, completes a glowing picture for the UK economy. Service providers reported the fastest growth since December 2006 […] As a result, confidence remains high, providing a platform for investment and expansion for the rest of the year.’
However, while the report was mainly positive it did note that ‘employment was a little stilted’.
In light of this data economists are expecting the Bank of England to present a less cautious outlook for the UK economy when it delivers its rate decision tomorrow.
The Pound extended gains against its peers after the data was published, however advances against the Euro were limited by the news that the Eurozone’s economy contracted by less than expected in the second quarter, year-on-year.
Current Pound Sterling (GBP) Exchange Rates:
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.5580 >
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1833 >
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.7040 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9823 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6418 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8453 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5856 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5049 >
(As of 10:05 GMT)
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