The UK’s service sector grew at its strongest pace in 2014, with approximately 100,000 new jobs added in April.
Data from Markit revealed that the sector expanded beyond expectations from 57.6 in March to 58.7 in April. UK firms reported a sharp increase in new orders suggesting an increase in business confidence.
The pound as a result gained against most of its peers as analysts become more confident about future growth prospects for economic growth; with some analysts suggesting that the strength of the UK recovery may force the Bank of England to raise interest rates sooner. GBPUSD made a fresh five year high.
Eurozone service sector growth hit a three high yesterday rising to 53.1 in April, with an increase in new orders as well as an increase in employment.
Markit, who released the data, then predicted that the Eurozone will grow by at least 0.5% in the second quarter of 2014 – with the upturn led by Germany. Perhaps of more importance economic growth in both Spain and Ireland has picked up, with the rate of growth for each at its fastest pace for 7 and 8 years respectively.
The US dollar weakened generally across the board for the majority of yesterday’s trading but did manage to get some reprieve in the afternoon after data showed that the country’s trade deficit narrowed by 3.6% in March to US$40.4bn as exports improved.
However with GDP figures being revised lower for the US and increased optimism over economic growth in the UK and the Eurozone, we could well see continued selling pressure on the US dollar.
15.00pm – USD – Fed’s Janet Yellen Speech.