Scottish independence: Services surge stems pound’s slide on uncertainties of ‘Yes’ vote

The pound was up slightly in morning trade at $1.6486, turning around previous falls

An unexpected August surge for the UK’s services sector today halted a slump in the pound driven down by rising fears of a “Yes” vote in the forthcoming Scottish independence referendum.

The latest survey snapshot of service firms — spanning hairdressers and bar staff to IT and accountants — showed activity hitting its highest level since last October.

The buoyant result offered some support to sterling in the wake of its fall to a 19-month low against the dollar yesterday, after a YouGov poll showed a significant gain in the share of Scots saying they will for independence in the September 18 referendum.

The pound was up slightly in morning trade at $1.6486, turning around previous falls. The FTSE 100 benchmark of leading shares was also given a lift in the wake of the survey, hitting its highest level in more than 14 years.

However, analysts warned the support for sterling might not last. “The growing ‘Yes’-s are weighing heavy on the pound currently and it’s likely that news surrounding this story will continue to dominate trading activity at least in the run-up to September 18, usurping any strong data releases along the way,” said Alex Edwards of UKForex.

The Markit/Cips PMI Index of services jumped to 60.5 last month, well ahead of the 50 mark that separates growth from expansion and outstripping analysts’ expectations of a slowdown in the indicator to 58.5.

The acceleration in services — which account for three-quarters of the economy — follows a very strong reading from builders last month, offsetting  a disappointing dip for the UK’s manufacturers.

“The UK domestic economy continues to roar ahead and [services] more than make up the loss in momentum from relatively small manufacturing,” said Rob Wood of Berenberg.

Economists said that the figures pointed to another strong GDP growth figure for the third quarter of the year, after the second quarter’s 0.8% growth. But they also highlighted signs that the recovery is becoming less balanced.

“The worry is that growth remains too dependent on the domestic economy, raising the risk that higher interest rates will derail the upturn,” said Chris Williamson of Markit.

Analysts also predicted the stronger reading will still not prompt the Bank of England to raise interest rates this year.

The Bank’s monetary policy committee began its monthly meeting today and will announce its decision tomorrow. Last month two external MPC members — Martin Weale and Ian McCafferty — voted to raise rates to 0.75 per cent, citing fears that wage growth inflation is imminent.

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own