Sterling jumps against the dollar after an unexpected rise in the UK Services Purchasing Manager’s Index (PMI) in January, to the highest level since March 2011. This data adds to the positive manufacturing PMI data from Wednesday. An improvement in both the manufacturing and services sector signals that the UK economy could avoid a recession.
GBPUSD spiked to 1.5857 from 1.5824within minutes of the data around 09:30 GMT.
The PMI Services report compiled by Markit/CIPS, climbed from December’s 54.0 to 56.0 in January. This surprised market expectations for a drop to 53.5. Any number above 50 indicates growth, versus below 50 shows contraction.
The data show that the UK services, which is a dominant sector for the British economy, expanded at the fastest pace in 10 months in January and firms grew much more optimistic.
The upbeat UK PMI data adds to the also positive euro zone services PMI released today. This is the first time since August that the euro region has shown signs of growth.