UK Services Sector Surges, Sterling Poised for Gains
The UK's services sector has rebounded in July, according to preliminary data from S&P Global. The Services PMI rose to 51.8, surpassing expectations and returning above the 50.0 threshold for expansion after a dip in June.
Not only did services bounce back, but the Composite PMI also shifted into growth territory at 52.1, supported by stronger readings across both services and manufacturing. The Manufacturing PMI increased to 52.8, exceeding forecasts.
The Pound saw mild selling pressure following the release, although GBP/USD was up 0.1% at around 1.3326 at the time of reporting.
Analysts believe that this robust economic activity will make the Bank of England more cautious about cutting interest rates, which could lead to higher short-term yields and push sterling stronger. Derivative traders are advised to position for GBP strength through long call options on GBP/USD.