The pound rose this morning after new data showed the services sector beat expectations in September, becoming the only one of the UK's three biggest sectors not to disappoint analysts.
The pound rose 0.3 per cent against the dollar, to $1.3272, and 0.2 per cent against euro, to €1.1293, after IHS Markit's said its closely-watched purchasing managers' index (PMI) for the services sector had risen to 53.6 in September, ahead of expectations of 53.2. Any figure above 50 denotes growth.
However, the analysis cautioned that firms in the sector were showing signs of weakness, with subdued domestic demand acting as a drag on activity growth, pushing incoming new work to the lowest in over a year.
Meanwhile, costs rose at their fastest since April, IHS Markit said. Slow business-to-business sales and delayed decision-making on large projects compounded their woes.
The news comes after disappointing PMIs for the manufacturing and construction sectors, with data published yesterday showing activity in the construction sector contracting in September for the first time in over a year.
"The services sector saw another month of modest growth, running in the middle ground between the robust expansion seen in manufacturing and the contraction recorded in construction," said Chris Williamson, chief business economist at IHS Markit.
"The three PMI surveys put the economy on course for another subdued 0.3 per cent expansion in the third quarter, but the fourth quarter could see even slower growth."
"Today’s print is a welcome boost and will provide a nice tonic to those who were growing concerned as to to the health of the economy," added David Cheetham, chief market analyst at XTB.
"A reading of 53.6 is slightly above the consensus forecast of 53.2 - which was inline with the prior reading - and the positive data will go some way to allaying recent economic fears."