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.
- 1 Toddler throws a tantrum at the White House – in front of Barack Obama
- 2 Irish people are travelling home from all over the world so they can vote to legalise gay marriage
- 3 Picture of couple posing with beached dolphin 'that later died' causes outrage
- 4 16-year-old girl beaten and burned alive by lynch mob in Rio Bravo, Guatemala
- 5 Witch doctor arrested after forcing newborn baby to walk in Indian village
Toddler throws a tantrum at the White House – in front of Barack Obama
Maryland mother found pushing her dead child on a swing in a playground
16-year-old girl beaten and burned alive by lynch mob in Rio Bravo, Guatemala
Picture of couple posing with beached dolphin 'that later died' causes outrage
Nicola Sturgeon did want David Cameron to win the general election, report concludes
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...