Investing.com - The pound rose to the highest level since September against the U.S. dollar on Thursday after data showing that activity in the UK service sector accelerated in June.
GBP/USD hit 1.3266, the most since mid-September 2016 immediately following the report and was at 1.3249 by 05.00 a.m. ET (09.00 a.m. GMT).
Financial data firm Markit reported that its services purchasing managers’ index rose to 53.8 last month, from 53.4 in June, which was a four month low.
Economists had expected a more modest increase to 53.6.
UK companies reported that new business remained solid and hiring picked up, but business expectations remained relatively weak as uncertainty over Brexit continued to weigh.
“Firms’ prospects for the coming year have slipped to a level which has previously been indicative of the economy stalling or even contracting, having taken a lurch downward since the general election, largely reflecting heightened uncertainty about the economic outlook and Brexit process,” chief Markit economist Chris Williamson said.
Sterling’s gains were held in check ahead of the Bank of England’s monetary policy meeting later Thursday. The BoE was expected to hold interest rates steady at record lows as the risks from Brexit continue to loom.
The pound was higher against the euro, with EUR/GBP down 0.33% to 0.8936 from around 0.8946 earlier.
The dollar was steady against a basket of the other major currencies, holding above 15-month lows as investors positioned ahead of key U.S. economic data due out on Friday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 92.81, after falling to 92.41 on Wednesday, its lowest since May 2016.
The greenback has been pressured lower by a combination of worries over political turmoil in Washington and recent lackluster economic reports, which have raised doubts over whether the Federal Reserve will raise rates again this year.