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UK Services Data Disappoints

Sterling gained slightly yesterday after positive manufacturing data however the negative numbers continued this morning after a major survey showed Britain’s services sector struggled to recover in April from a sharp slowdown in March, further squeezing expectations of an interest rate hike next week.

The IHS Markit/CIPS services purchasing managers’ index rose to 52.8 in April from March’s 20-month low of 51.7, a smaller increase than the estimates 53.5 and its second-lowest level since September 2016.

The dollar remained supported after the Federal Reserve indicated that it is on track to keep gradually raising interest rates, including at its June meeting.

The Fed, in a statement released, acknowledged a recent pick-up in inflation but gave no indication that it will accelerate the pace of rate increases in response.

The statement did little to alter market expectations that the Fed will deliver its second rate increase of the year when it meets in June.

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