The British pound is benefiting from a weaker dollar on Tuesday afternoon, after the greenback tumbled on weaker than expected performance by the services sector in the US.
Sterling has gained almost 1% as of 3:45 p.m. BST (10:45 a.m. ET) passing above the $1.34 mark for the first time since late June after the services sector across the Atlantic came in at just 5
1.4 for August. That’s the lowest reading since February 2010, when the index pulled out of contractionary territory following the Great Recession.
Here’s how that looks:
Sterling has been on something of a tear in recent weeks, as data coming out of the British economy suggested that the country may not have taken as big a hit than expected.
In the last week alone, IHS Markit’s PMI surveys for all three crucial sectors of the economy — services, manufacturing, and construction — have bounced back from disastrous figures in July.
Manufacturing, for instance, saw its biggest single month jump in history, while services jumped quicker than at any time in 20 years. The construction sector remained in contraction,but it is important to note that the sector was already shrinking even before the Brexit vote.
That data has led several banks, including Morgan Stanley and Credit Suisse, to row back on forecasts that they expect the British economy to fall into recession.
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