GBP/USD on session highs after strong UK services PMI

The pound soared to its highest point today against the US dollar, following the release of stronger than expected report on services PMI in the United Kingdom.

GBP/USD hit a session high at 1.5609 at 9:02 GMT, after which the pair consolidated at 1.5605, up by 0.29% for the day. Support was likely to be received at current session low, 1.5554, while resistance was to be met at August 22nd high, 1.5664.

Earlier on Wednesday Markit research group in cooperation with the Chartered Institute of Purchasing and Supply (CIPS) reported that activity in the sector of services in the United Kingdom rose at the fastest pace in 6.5 years in August. Services PMI reached a value of 60.5 from 60.2, recorded a month ago, exceeding preliminary estimates of a reading of 59.7.

“With sister surveys for construction and manufacturing also signaling the continuation of substantial growth, the U.K. is well on course to register a strengthening of GDP growth over Q3 as a whole following the 0.7% increase in Q2” said Paul Smith, senior economist at Markit, cited by Investing.com.

“The improvement in data in recent weeks has helped to support sterling as it has forced some to reduce their short positions,” said Henrik Gullberg, a currency strategist at Deutsche Bank AG in London, cited by Bloomberg. “While we remain relatively bearish on sterling because of the country’s weak external position, positive data headlines will probably underpin the pound in the near term.”

Additionally, Bank of England’s nine-member Monetary Policy Committee will maintain its bond-purchase target at 375 billion GBP on Thursday, according to all 38 economists, surveyed by Bloomberg.

Meanwhile, concerns over a possible military campaign against Syria by the United States continued to make its mark on market sentiment after some congressional leaders, including Republican House Speaker John Boehner and Democrat Nancy Pelosi expressed their intentions of backing President Barack Obamas initiative for a military strike. Additionally, US Representative for Virginias 7th congressional district, Erik Cantor also expressed his support for a resolution by the Congress, which to approve the use of military force in the Middle East.

Elsewhere, the sterling was higher against the euro, touching 3.5-month highs, with EUR/GBP cross erasing 0.28% to trade at 0.8443 at 9:25 GMT. GBP/JPY pair was gaining 0.25% to trade at 155.32 at 9:26 GMT.