The British pound today rallied higher after the release of the UK Services PMI for May by IHS Markit, which beat expectations by a significant margin. The positive PMI data served to raise expectations of a rate hike by the Bank of England in the near future as the country’s GDP growth rebounds in the current quarter.
The GBP/USD currency pair today rallied from a low of 1.3301 to a high of 1.3393 gaining over 90 points after the PMI release.
The currency pair rallied higher after the release of the Markit/CIPS UK Services PMI, which came in at 54.0 exceeding the consensus estimate of 53.0. The Services PMI was the latest PMI print to beat expectations after the construction and manufacturing PMIs also surpassed expectations. The three upbeat PMIs indicate that the UK economy is on track to post 0.3%-0.4% GDP growth in the second quarter given the weak growth recorded in the first quarter. The upbeat PMI reading also raised investors’ expectations of a rate hike by the BoE at their August meeting.
The British pound was weighed down by Brexit jitters as the issue of the Irish border is yet to be resolved. It is not yet clear whether the UK shall have a hard land border with the EU at the Irish border post-Brexit.
The currency pair’s future performance is likely to be affected by the release of the US ISM Non-Manufacturing/Services PMI later today.
The GBP/USD currency pair was trading at 1.3355 as at 11:27 GMT having rallied from a low of 1.3301. The GBP/JPY currency pair was trading at 146.60 having risen from a low of 146.03.
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