Business activity in the UK's services sector grew during June compared to the previous month, according to the Chartered Institute of Purchasing and Supply (CIPS). The index that gauges growth in the largest sector in Britain's economy rose to 54.5 in June from 51.9 in May, the highest reading for the index since November 2002. Economists had forecast a lower reading of 52.2. A reading above 50 indicates an expansion in activity, while a below-50 figure indicates contraction.
June's reading points to a faster pace of overall expansion in the UK service sector and is a key factor in the Bank of England's decision on what to do with UK interest rates before the next meeting of the central bank's monetary policy committee (MPC) next Thursday. Some analysts had expected the MPC to announce a cut. Today's figures may push economists to lean towards a more conservative approach to further interest rate reductions. Today's figures also revealed that the sub-index for orders and incoming new business rose to 54.3 from 52.7 in May, indicating the fastest pace of expansion since last October. The index for current business outstandings rose to 47.0 from 46.8 the previous month. //www.fxcentre.com