Pound Sterling jumped to $1.3675 after UK services activity unexpectedly accelerated, adding to signs that the economy is holding up better than feared.
The Pound to Dollar (GBP/USD) exchange rate surged to an intraday high of 1.3675 on Friday after a much stronger-than-expected UK services survey delivered a fresh positive surprise for Sterling.
The S&P Global flash PMI survey showed the UK Services PMI rising to 52.8 in August from 52.1 in July, its strongest reading for six months and well above the 51.8 consensus in a Reuters poll.
The composite PMI also strengthened to 52.5 from 52.2, compared with expectations for 51.6, while manufacturing eased to 51.5 from 51.9.
GBP/USD later eased back to around 1.3656 by late morning, still 0.09% higher on the day and 0.91% stronger over the previous five sessions.
Services Surprise Strengthens the UK Resilience Story
S&P Global said the survey was consistent with UK GDP growth of around 0.3% in the third quarter, with services benefiting from better domestic conditions, favourable weather and technology investment.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said: “The expansion is being helped by sunny weather and tech investment”.
There were still reasons for the Bank of England to remain cautious. Employment continued to fall and price pressures picked up again as higher energy costs fed into business expenses.
The combination leaves the BoE facing stronger activity alongside persistent inflation risks, reducing the urgency for any near-term policy easing.
For GBP/USD, the fresh 1.3675 high is now the immediate resistance point. A sustained break above that area would put the 1.3700 level in focus, while a retreat below 1.3600 would suggest the post-PMI momentum is beginning to fade.
Our currency coverage draws on live market data, official economic releases and published bank research.
