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Sterling was the biggest winner versus the dollar among the most-traded currencies as the U.K.’s service industries accelerated at the fastest pace in more than a year last month.
Markit Economics Ltd. and the Chartered Institute of Purchasing and Supply said a gauge of U.K. services based on a survey of companies rose to 57.1, the highest level in 13 months and above the median forecast of 52.6.
“The number was much higher than all expectations across the market, so the net impact has been strong in favor of the pound,” said Roberto Mialich, a senior currency strategist at UniCredit SpA in Milan. “The data hints that the risk of a prolonged stagnation is vanishing. The BOE will be forced to raise rates this year, and this should limit the downside potential for sterling.”
The dollar rose against the yen after Federal Reserve Chairman Ben S. Bernanke said yesterday inflation must be watched “extremely closely,” spurring bets interest rates may be raised sooner than forecast.
Australia’s dollar dropped from almost a record after the Reserve Bank of Australia Governor Glenn Stevens held the overnight cash target rate at 4.75 percent for a fourth straight meeting as floods disrupted coal mining in the nation’s northeast and a rising currency tempered inflation.
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