GBP/USD close to 1.70 as U.K. Services Expand

The pound strengthened the most in four weeks against the dollar as a measure of U.K. services expanded more in April than economists forecast and an index of employment improved.

Sterling rose versus 12 of its 16 major counterparts as the Organisation for Economic Cooperation and Development raised its growth forecasts for Britain for this year and next. U.K. government bonds fell, with two-year yields climbing to the highest level since July 2011, as demand for the safety of fixed income assets waned. The Bank of England starts a two-day policy meeting tomorrow after Governor Mark Carney said last week borrowing costs may remain low due to slack in the labor market.

“This is a very positive report on the U.K. services economy, especially if we consider the employment sub-index,” said Eimear Daly, head of market analysis at Monex Europe Ltd. in London. “The report suggests this spare capacity slack is being squeezed tighter and the Bank of England will soon run out of room to keep policy loose. Even at these lofty heights, sterling still has further to go.”

Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.