Forex: Pound surges following better than expected PMI Services data

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The UK released the PMI Services index much better than expect in March at 57.1 from a previous 52.6. The forecast amount was expected to decline very slightly to 52.5. This has been the largest jump in 13 months, giving an indication that the British economy has expanded in the first three months of 2011.

The data were compiled by Markit Services and measures the growth as reported by Purchasing Managers. In January the Index reported the largest increase since the survey started in 1996, with the current one being the second highest increase. The Purchasing Managers Index is a leading indicator of economic health. The survey includes ratings on the level of business conditions as viewed by purchasing managers, and includes employment, productions, new orders, prices, inventories.

At the time of the release of the news at 0930 GMT, the Pound spiked over 140 pips against the US Dollar to hit a high of 1.6249 from a pre-news low of 1.6147. Meanwhile the EURGBP pair plummeted over 83 pips from the opening level of 0.8811to 0.8728 after the news. GBPJPY surged almost 90 pips to peak at 136.97 from 136.08 pre-news time.