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The pound was one of the strongest risers against the dollar after figures showed that the UK services sector grew faster than expected last month, boosting optimism about the health of the UK economy.
Sterling rose 0.5 per cent to touch over $1.54 after a purchasing managers’ index from Markit gave a reading of 54.9 in May, its strongest reading in more than a year.
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The figures followed a raft of recent positive data on the UK economy, with numbers earlier in the week showing the UK construction sector unexpectedly expanded in May while growth in the manufacturing sector also beat estimates.
The pound rose 0.5 per cent against the euro to €1.1766.
The euro was steady against the dollar even as figures showed that the eurozone services sector contracted at a faster rate in May than had initially been estimated.
The single currency was flat at $1.3078 after a purchasing managers’ index from Markit gave a reading of 47.2 for the eurozone services industry in May, down from a flash estimate of 47.5.
Currency investors remained focused on Thursday’s decision from the European Central Bank over whether to cut rates further to help stimulate the eurozone economy. Last month, the ECB cut its main refinancing rate to 0.5 per cent and said it had not ruled out introducing negative interest rates on deposits. Expectations were for the ECB to take no further action in June.
The Japanese yen gained against other major currencies after market participants were underwhelmed by fresh economic reforms laid out by Japan’s prime minister, Shinzo Abe. The dollar fell below Y100 to hit a low of Y99.04, a loss of more than 0.8 per cent.
The dollar index fell 0.1 per cent to 82.65 after an employment report from ADP showed that fewer jobs than expected were created in the US private sector in May, with 135,000 jobs added, down from estimates of 165,000.
The Brazilian real was hit by volatility after Brazil’s central bank scrapped a tax on foreign investors, helping the currency to hit R$2.08 against the dollar. It then weakened to R$2.15 before rising again after the central bank announced action to strengthen the real via a currency swap.
