Sterling bounces to 10-day high against weakened dollar
By Patrick Graham
LONDON (Reuters) - Sterling rose to its strongest against the dollar in almost two weeks on Thursday, recovering all of the ground lost in the aftermath of the launch of the Brexit campaign last week as the U.S. currency slid ahead of jobs numbers on Friday.
A poor reading of the health of the Britain's huge services sector had halted a recovery by the pound from last week's Brexit-driven sell-off earlier in the day.
But as worries about the underlying strength of the U.S. labour market knocked around half a percent off the dollar against a basket of currencies, the pound rose 0.4 percent on the day to $1.4136.
Sterling was down a quarter of a percent to 77.38 pence per euro and a touch higher on the day when measured by the Bank of England's index of its strength against a basket of currencies.
"Since the end of last week currencies from commodity exporting countries have appreciated and sterling has recovered as Brexit fears calmed somewhat," analysts from Dutch bank ABN Amro said in a note on Thursday.
Since bottoming out at just over $1.38 last week, the pound has now gained back around 3 percent and against the dollar is trading slightly above the levels at which it headed into an EU summit two weeks ago.
There are, however, growing worries about the pace of UK growth in the run-up to the Brexit vote in June.
A regular survey of service sector purchasing managers showed the headline sentiment index falling to its lowest in three years and pointed to overall first quarter economic growth of just 0.3 percent, which would be the lowest since 2012.
February's PMI was also the first in which managers surveyed cited the June vote over whether to remain in the European Union as a worry.
The numbers were the starkest sign to date that Britain's recovery from the financial crisis is losing momentum, having failed to generate wage and inflation growth to make the Bank of England raise interest rates.
"Sterling has staged a recovery over the past few days," said Andy Scott, an economist at corporate and retail broker HiFX. "(The data) however highlighted the ongoing impact of the uncertainty cause by the EU referendum.
"This week's PMI numbers - which are usually a reliable indicator of economic activity - indicate growth may have slowed sharply in the current quarter."
(Reporting by Patrick Graham and Andy Bruce; Editing by Nigel Stephenson and Andrew Heavens)
