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Pound rallies after service sector data | Pound rallies after service sector data |
(about 5 hours later) | |
(Close): The pound has lost some of the sharp gains made against the dollar after strong data on UK services. | |
The Markit/CIPS purchasing managers' index showed activity in UK services recorded the biggest month-on-month rise in the survey's history. | The Markit/CIPS purchasing managers' index showed activity in UK services recorded the biggest month-on-month rise in the survey's history. |
At one stage the pound hit $1.3372 against the dollar, but slipped back to trade at $1.3312, a rise of just 0.13%. | |
Some analysts think the data indicates the UK might avoid recession later this year. | Some analysts think the data indicates the UK might avoid recession later this year. |
"The prospect of sterling strength is on the horizon as today's PMI figures suggest that the reported fall in activity following the EU referendum may have been a blip," said Ranko Berich, from Monex Europe. | "The prospect of sterling strength is on the horizon as today's PMI figures suggest that the reported fall in activity following the EU referendum may have been a blip," said Ranko Berich, from Monex Europe. |
"They do change the likelihood of a severe economic contraction in the third quarter, which previously seemed all but assured for many observers," he added. | "They do change the likelihood of a severe economic contraction in the third quarter, which previously seemed all but assured for many observers," he added. |
Outlook warning | Outlook warning |
Other analysts warned not to read too much into the latest numbers. | Other analysts warned not to read too much into the latest numbers. |
"These PMIs are only surveys - more hard economic data over the coming months will be crucial. It's easy to read to too much into a survey for a single month. We are not out of the woods yet," said Neil Wilson, markets analyst at ETX Capital. | "These PMIs are only surveys - more hard economic data over the coming months will be crucial. It's easy to read to too much into a survey for a single month. We are not out of the woods yet," said Neil Wilson, markets analyst at ETX Capital. |
The FTSE 100 was not moved much by the data. It eased lower, falling by 15 points to 6,879. | |
Banks weighed on the index, with Royal Bank of Scotland falling by 3.5% and Lloyds Banking Group down 2.1%. | |
Those shares fell after negative comments from analysts at Deutsche Bank. | Those shares fell after negative comments from analysts at Deutsche Bank. |
Mining shares were a bright spot on the FTSE 100. BHP Billiton was up 1.3% and Randgold Resources rose 1.6%. | |
Shares in Marks and Spencer fell 1.4% following confirmation that it plans to cut more than 500 jobs at its head office. | |
US financial markets were closed for Labor Day. |