Sterling rose from the day’s lows we reached yesterday afternoon though investors were wary of pushing it higher before data that may raise hopes of an interest rate hike in August and rising political uncertainty after the resignation of two top ministers.
Boris Johnson followed Brexit minister David Davis in resigning in opposition to May’s hard-fought blueprint for how Britain is to structure its relationship with the European Union after its leaves the bloc in March.
However, recent improvement in economic data and upbeat comments from Bank of England Governor Mark Carney has lifted expectations of an August rate hike to more than 70 percent from less than 50 percent two weeks ago.
Britain’ economy picked up a bit of speed in May after a slowdown in early 2018, leaning on the services sector for growth as output in manufacturing disappointed, official data showed on Tuesday.
A new monthly reading of gross domestic product — which was watched closely by the Bank of England as it considers whether to raise interest rates next month — showed the world’s fifth-biggest economy grew by 0.3 percent in May from April.
That was up from growth of 0.2 percent in April and in line with the forecast in a poll of economists, marking the strongest growth since November, the Office for National Statistics said.
The ONS said the data provided a mixed picture of the economy, which was showing only modest growth.
In a breakdown of the GDP numbers, the ONS said Britain’s dominant services industry grew 0.3 percent month-on-month in May, slowing slightly from an upwardly revised 0.4 percent in April.
Over the three months to May, growth in the services sector — which makes up 80 percent of the economic output — picked up speed to 0.4 percent from 0.2 percent.
Industrial output and manufacturing data disappointed, however.