Sterling jumps after UK service report

The pound is higher versus the US dollar after UK services PMI data hit a six-and-a-half-year high.

GBP/USD is trading at $1.5336, up 0.3%, after the UK revealed a services purchasing managers index (PMI) reading of 60.2 for the month of July. Analysts were expecting a figure of 57.4. The news prompted traders to buy the pound against the US dollar, as this could be an indication that the British economy is turning a corner.

Thinking back to the start of last week, the pound was sliding against the US dollar, as traders were expecting a strong non-farm payrolls number from the US on Friday. However, when the figure came in below expectations the pound rallied. Traders are keeping an eye on the Federal Reserve, as they feel if the US economy and in particular the jobs market picks up, the stimulus package could be tapered.

The only economic announcement from the US today is the ISM non-manufacturing report at 3pm (London time). If the figure beats market expectations we could see traders take profits on their long sterling positions.

Spot FX GBP/USD chart

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