Activity in the U.K. service sector logged its strongest rise in 2017, bolstering optimism over the British economy as the sector makes up approximately 80% of gross domestic product, industry data showed on Wednesday.
In a report, market research group Markit said its seasonally adjusted Markit/CIPS services purchasing managers' index (PMI) increased to 55.0 last month from a reading of 53.3 in February.
Analysts had expected the index to inch up to 53.5. On the index, a level above 50.0 indicates expansion in the industry, below 50.0 indicates contraction.
Markit indicated that new work increased at a strong pace although job creation slowed. Furthermore, the research firm highlighted that the strongest prices since September 2008 charged inflation.
Markit chief economist Chris Williamson commented that the relative weakness of the survey data when compared to the turn of the year suggest that growth in the first quarter will be 0.4% in the first quarter, "markedly lower than the 0.7% expansion seen in the fourth quarter of last year."
Williamson said that the uptick in March PMI surveys coincided with a neutral policy stance at the Bank of England.
"As such, the data add to the sense that, with economic and political uncertainty likely to intensify as the Brexit process gets underway, policymakers are likely to continue to stress the need to look through any further upturn in inflation and focus instead on the need to keep policy on hold to support economic growth," this expert concluded.
Following the report, GBP/USD was trading at 1.2473 from around 1.2437 ahead of the release of the data, EUR/GBP was at 0.8560 from 0.8580 earlier, while GBP/JPY traded at 138.07 compared to 137.67 previously.