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Pound perks up on PMI ahead of BoE decision

Sterling is gaining ahead of the Bank of England’s decision on interest rates later today and following better than expected data suggesting activity in the UK services sector edged up in July.

At pixel time, the pound is up 0.3 per cent at $1.3255 against the dollar, its highest level since September 2016.

That takes the pound up 0.7 per cent against the dollar this week, bringing its rally against the world’s reserve currency for the year-to-date to over 7 per cent.

The UK currency’s performance against the greenback is flattered by the general trend for a weaker dollar, as hopes for fiscal stimulus and tax cuts in the US fade with the Trump administration’s growing problems.

Against the euro, the pound is almost 5 per cent weaker over 2017, although it rose 0.4 per cent on the day to £0.8922 against the shared currency, taking it back to the £0.8920 mark it touched on Monday and last held in late July.

The rally comes after a a monthly survey of services from IHS Markit showed an improved performance, raising hopes the economy has had a solid start to the third quarter.

Chart: Bloomberg