Sterling rose against the dollar on Wednesday after data showed that Britain's services sector had expanded at its fastest pace in more than two years, helping to reduce bets on immediate monetary easing. The Purchasing Managers' Index (PMI) for the services sector jumped to 56.9 in June from 54.9 previously, beating expectations and the highest forecast in a Reuters poll.
Sterling was up 0.8 percent at $1.5282, recovering smartly from a one-month low of $1.5130 touched earlier. Resistance was cited at its 100-day moving average at $1.5289. Uncertainty about monetary policy under new Bank of England Governor Mark Carney could limit sterling's gains against the dollar, which has been supported by expectations that the US Federal Reserve will slow the pace of its bond-buying programme. But strong readings for the UK manufacturing, construction and services PMIs this week have signalled a nascent economic recovery taking hold in the second quarter. That has supported sterling, as markets rethink their view on aggressive monetary easing by the Bank of England.
The euro was down 0.8 percent at 84.97 pence, slipping from Tuesday's one-month high of 85.945 pence. The pair was on track for its worst daily performance since April 25. Support was cited at the June 26 low of 84.695 pence. The single currency has been hurt by political tensions in Portugal and analysts said that sterling could benefit from safe-haven flows if conditions in the euro zone worsened.