Sterling jumped to a 7-week high against the dollar today, and hit a one-month peak against the euro after a survey showed Britain’s services industry bounced back strongly in August from a slump triggered by Brexit.
The Markit/CIPS Purchasing Managers’ Index (PMI) for the dominant services sector jumped to 52.9 in August from July’s seven-year low of 47.4, the biggest one-month gain in the survey’s 20-year history and one which beat all forecasts in a polls.
The survey echoed the upbeat tone of data released last week on the manufacturing and construction sectors in August and bolstered a view that the economy was holding up well so far.
Sterling could rise a bit before meeting resistance at around $1.3480, the high struck on July 15.
In the past few weeks, sterling has been trading well above a 30-year low of $1.2798 struck on July 8, helped by better-than-expected data that has taken the edge off concerns about a sharp decline in economic activity following British voters’ decision in a June 23 referendum to leave the EU.
Speculators trimmed record high bets against the pound in the week ended Aug. 30 and analysts said if investors roll back expectations of further monetary easing in coming months, sterling could advance further.
The Bank of England cut rates to near zero early last month and launched an asset purchase to cushion the economy from the shock decision to leave the EU.