Pound Rallies Against Peers as British Services Industry Expands

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Pound Rallies Against Peers as British Services Industry ExpandsThe pound advanced to a four-week high against the dollar after a report showed that U.K. services activity rose more than expected in April, spurring demand for the sterling.

The pound was up 0.5 percent at $1.6947 as of 10:40 a.m. trading in London, after earlier touching $1.6953, its strongest level since August 2009. The pound remained slightly unchanged at 82.17 pence per euro.

Financial research firm Markit Economics released its purchasing managers’ index of services sector today, which increased 58.7 in April from March’s 57.6. Economists in a Bloomberg survey had forecasted an index of 57.8. A reading above 50 indicates expansion.

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The pound also benefitted from a report that showed service industry employers hired more workers. The composite MPI for manufacturing and services edged higher to 59.2 last month, its strongest level since November, up from March’s 57.8. The index of service sector employment rose from 53.5 in March to 56 in April.

Though unemployment levels are lower than the level set by Bank of England’s policymakers, Governor Mark Carney recently revealed that the interest rates may remain static until the slack in the labor market is resolved.

“This is a very positive report on the U.K. services economy, especially if we consider the employment subindex,” Eimear Daly, the London-based head of market analysis at Monex Europe, Ltd told Bloomberg. “The report suggests this spare capacity slack is being squeezed tighter and the Bank of England will soon run out of room to keep policy loose. Even at these lofty heights sterling still has further to go.”

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com