The US Dollar (USD) recovered ground against the Pound (GBP) after the latest Institute for Supply Management (ISM) non-manufacturing Index showed that activity in the USA’s service sector hit an 8 ½ year high in July.
According to the ISM index, activity increased to a reading of 58.7, the highest level seen since December 2005.
The figure beat the 56.0 figure recorded in June and beat economist forecasts for a reading of 56.1.
The Non-Manufacturing Business Activity Index increased to 62.4, which is 4.9 points higher than the June reading of 57.5, meaning that growth has occurred for the 60th month in a row at a faster rate.
The number was the highest reading for the index since February 2011 when the index registered 63.3.
An employment index also advanced strongly.
The index increased to a reading of 56 in July, up from the 54.4 figure seen in June.
It is the fifth consecutive month in which the sub index has strengthened and bodes well for future jobs data.
Another report published by the Washington based Commerce Department showed that new orders surged to their highest level since August 2005, adding to signs that the US and wider global economies are strengthening.
Orders for manufactured goods increased by 1.1% in June, reversing the 0.6% drop recorded in May.
The figure was far better than the expected 0.6% increase.
Further gains against the Pound were restrained as the UK currency also continued to find support from positive service PMI data of its own.
Against the Euro (EUR) the ‘Greenback’ strengthened to a nine-month high as the upbeat data contrasted with lacklustre PMI data out of the Eurozone.
The single currency weakened after investors were spooked by a report, which showed that service sector activity in Italy grew at a slower pace than forecast last month.
The previous month had seen activity in the country hit its best level since 2010.
Economists will now be turning their attention to Thursday’s Bank of England (BoE) and European Central Bank (ECB) policy meetings.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.5933 ,
US Dollar,,Euro,0.7483 ,
US Dollar,,Canadian Dollar,1.0945 ,
US Dollar,,Australian Dollar,1.0748,
Pound Sterling,,US Dollar,1.6856 ,
Euro,,US Dollar,1.3363 ,
[/table]
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