The pound extended its recovery against its major counterparts Wednesday after data released by IHS Markit showed the UK services industry shone during March.
The monthly purchasing managers index for the services industry rose to 55.0, up from 53.3 in the previous month, a far greater increase than the market had been expecting.
“Stronger activity growth was linked to supportive UK economic conditions and greater client demand,” the survey compiler said.
Sterling rose by nearly 80 points against the US dollar, to trade close to the 1.2500 threshold, while renewed strength of the pound helped push the EUR/GBP exchange rate down by 60 points to 0.8520 at its lowest point.
The March rate of growth was the strongest seen across the sector so far in 2017 and follows a two month period in which activity dipped, after a strong finish to 2016.
“There were also reports that exchange rate depreciation had led to new sales enquiries from abroad and improved demand from overseas clients (especially the US),“ IHS Markit added in its report.
Wednesday’s data follows surveys for both manufacturing and construction industries which also appeared to point toward the UK economy remaining on an even keel so far into the new year.
“Survey respondents also remained optimistic about the year-ahead business outlook, with almost half of the survey panel forecasting growth while only one-in-nine expect a fall in activity,” Wednesday’s report said.
Optimism has been a central theme in all of the week’s data releases, with those in both manufacturing and construction industries each expecting to see a further improvement in conditions later in the year.