Investing.com – The pound surged to an eight-day high against the U.S. dollar on Tuesday, after a surprisingly strong rise in Britain's services sector activity renewed expectations for a rate hike by the Bank of England in the coming months.
GBP/USD hit 1.6249 during European early afternoon trade, the pair’s highest since March 24; the pair subsequently consolidated at 1.6227, gaining 0.60%.
Cable was likely to find support at 1.6090, the day’s low and short-term resistance at 1.6266, the high of March 24.
The Markit/CIPS services purchasing managers index surged to a 13-month high of 57.1 in March from an unrevised 52.6 in February, confounding expectations for a dip to 52.5.
Markit said that based on March's figures it now believed U.K. gross domestic product grew 0.8% in the first quarter, up from a 0.5% estimate after February's PMI data for the services, manufacturing and construction sectors.
The strength of first-quarter GDP is seen as a key factor in whether the Bank of England will hike interest rates in the coming months.
However, Markit economist Paul Smith said it was unclear whether March's data was a blip or marked the resumption of solid growth in the services sector.
Meanwhile, the pound was little changed after China's central bank raised interest rates for the second time this year in an attempt to curb escalating inflation.
The pound was also up against the euro, with EUR/GBP tumbling 0.89% to hit 0.8736.
Later Tuesday, the U.S. was to publish data on service sector growth while the Federal Reserve was to publish the minutes of its most recent policy setting meeting.
GBP/USD hit 1.6249 during European early afternoon trade, the pair’s highest since March 24; the pair subsequently consolidated at 1.6227, gaining 0.60%.
Cable was likely to find support at 1.6090, the day’s low and short-term resistance at 1.6266, the high of March 24.
The Markit/CIPS services purchasing managers index surged to a 13-month high of 57.1 in March from an unrevised 52.6 in February, confounding expectations for a dip to 52.5.
Markit said that based on March's figures it now believed U.K. gross domestic product grew 0.8% in the first quarter, up from a 0.5% estimate after February's PMI data for the services, manufacturing and construction sectors.
The strength of first-quarter GDP is seen as a key factor in whether the Bank of England will hike interest rates in the coming months.
However, Markit economist Paul Smith said it was unclear whether March's data was a blip or marked the resumption of solid growth in the services sector.
Meanwhile, the pound was little changed after China's central bank raised interest rates for the second time this year in an attempt to curb escalating inflation.
The pound was also up against the euro, with EUR/GBP tumbling 0.89% to hit 0.8736.
Later Tuesday, the U.S. was to publish data on service sector growth while the Federal Reserve was to publish the minutes of its most recent policy setting meeting.