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The UK services PMI rose to 54.9 in May, a 14-month high, when economists were only expecting a reading of 53.1; this boosted the pound versus the US dollar. This is the third set of positive of PMI data from the UK this week: the manufacturing and construction reports on Monday and Tuesday respectively also came in higher-than-expected. This tells us that the country's economy is improving and that the quantitative easing scheme is working.
The Bank of England will announce its latest interest rate decision tomorrow at 12pm. Traders are expecting the rates to remain unchanged at 0.5%, but if there are any positive comments about the UK economy we could see the pound trade higher versus the US dollar.
Today at 1.15pm (London time) the US ADP employment change will be released, which can often be an indication of the upcoming non-farms payrolls report and unemployment figures, both of which are announced on Friday. Therefore, if today’s ADP figure is worse-than-expected, we could once again see the pound trade higher versus the US dollar.