Pound rises vs dollar despite negative U.K. data; BOE policy meeting on tap

On Wednesday the pound was higher against the dollar despite data indicating that growth in the U.K. service sector slowed more than expected last month, signaling that the economic recovery may be losing momentum. 

GBP/USD was last higher 0.16% at 1.5589.

The Markit U.K. services purchasing managers' index fell to 57.4 in July from 58.5 in June, below expectations for a reading of 58.0.

Hiring in the sector declined to its slowest pace since March 2014, the report said.

Markit commented that, taken together with surveys of the manufacturing and construction sector earlier this week, the reading points to economic growth of 0.6% in the third quarter - down slightly from 0.7% in the three months to June.

The British currency was supported before the Bank of England's announcement of its latest interest rate decision on Thursday. The bank is also expected to release the minutes of its monetary policy meeting and give their latest quarterly forecasts for economic growth and inflation.

The pound was also higher against the euro with EUR/GBP last trading at 0.6964.

Data on Wednesday showed earlier that private sector growth in the eurozone eased in July, as the euro area composite index fell to 53.9 from June’s four year high of 54.2.

Another report showed that retail sales in the region fell by a larger than forecast 0.6% in June.

Separate data showed that euro zone service sector activity rose unexpectedly in the last quarter, industry data showed on Wednesday. Markit said in a report that Euro Zone Services PMI rose to 54.0, from 53.8 in the preceding quarter. Analysts had expected Euro Zone Services PMI to remain unchanged at 53.8 in the last quarter.