Sterling boosted by positive service sector data

Better-than-expected services growth data from January saw sterling perform well across the board, with signs pointing to healthy economic growth throughout the UK in January. With strong growth in both the manufacturing and construction industries passing with little effect earlier in the week, investors reacted positively to growth in the highly influential services sector. Coupled with a slightly disappointing reading from an independent estimate of non-farm payrolls in the US, this saw sterling continue the positive movement seen against the US dollar on Tuesday. Sterling also performed well against the euro, reversing losses seen on both Monday and Tuesday to end the day closer to the levels seen last week.

Today sees the culmination of the Bank of England (BoE)’s latest policy meeting, which is likely to result in them leaving interest rates on hold at 0.5%. With this level forecast to remain stable until early in 2016, we are unlikely to see much market reaction to the news.