by Adam Solomon
Sterling / Euro and US Dollar
The Pound has rallied strongly against the majors this morning, after a report from the Chartered Institute of Purchasing and Supply showed that UK service industries accelerated to the fastest pace in more than a year last month. A survey on companies rose to a 13-month high from February and the report will increase optimism that the economic recovery is gaining momentum and the prospect of a near-term increase in UK interest rates.
The BoE will probably refrain from raising rates this week but the increase in service sector growth shows that the economy accelerated in the first quarter. If the preliminary GDP data for the three months to March is ahead of expectations, the prospect of a rate increase by May/June will increase significantly and the Pound will improve. The UK currency traded up towards 1.1440 against the Euro and above 1.62 versus the Dollar following the data this morning.