UK Economy Surges 0.4 Percent in July Despite Rising Energy Costs

The UK economy beat expectations in July, growing 0.4 percent due to expansion in the services sector, which grew by 0.4 percent month-on-month.

This growth has continued a string of relatively upbeat readings for the British economy and has led to sterling rising slightly on Friday. It climbed 0.1 percent to USD1.352 against the US dollar and rose a similar amount against the euro, with the euro zone's currency down 0.1 percent against the pound at 85.84 pence.

Economists' forecasts had predicted flat growth for July, so this news has been seen as positive for the UK economy, which expanded 1 percent in the first half of the year, the fastest growth in the G7.

Some analysts have cautioned that issues with seasonal adjustments could mean the figure is overstated, but others believe it shows the economy's resilience despite rising energy costs. Brent crude oil prices rose to USD110 a barrel for the first time since May, driving traders to bet on interest rate hikes and sending bond yields to multi-year highs.