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FX round-up: Sterling shrugs off service data

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Date: Friday 04 Apr 2008

LONDON (ShareCast) - Sterling recovered against the dollar having initially dropped earlier on Thursday after data showed growth in Britain’s service sector slowed more than expected.

The purchasing managers index tumbled to 52.1 last month, its lowest since last November, down from 54 in February and far more than the slip to 53.3 economists had predicted, according to fresh data from the Chartered Institute of Purchasing Supply.

Meanwhile, the Bank of England’s Paul Tucker appeared to cool expectations that UK interest rates will fall next week, as he called for a more gradual change in borrowing costs in the face of rising inflation.

“The broad policy strategy is to offset some but not all of the adverse shock to demand from tighter credit conditions,'' said Tucker, head of markets at the central bank, in a speech in London.

The dollar was mixed against other major currencies after a report showed the number of people out of work rose last week.

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