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Sterling holds its own

Sterling held steady below seven-month highs against the dollar today after the results of a survey of Britain’s huge services sector, following stronger-than-expected data in a corresponding manufacturing survey. The PMI services came in at 55.8 higher than the expected 54.5, while the PMI composite came in at 56.0 ahead of expectations.

Corresponding construction and manufacturing sector surveys earlier this week exceeded market expectations.

For most yesterday the pound held steady, brushing off a verbal spat between Britain and the European Union suggesting negotiations over Britain’s departure from the bloc could become acrimonious.

After the Federal Reserve minutes left room for a U.S. interest rate rise in June the pound fell more than half a percent against the greenback.

The pound’s steep fall after last year’s Brexit vote has aggravated domestic inflation, and analysts say the notion that faster price rises are taking a toll on services remains in place.

Nevertheless, they say the lift to sterling after May’s announcement of a snap election next month should help tame inflation and ease the strain on consumers, who propped up the UK economy with robust spending after the EU referendum.

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