Investing.com - The pound pulled back from almost seven-and-a-half month lows against the broadly stronger dollar on Thursday after data showing that the U.K. service sector grew at the fastest rate in four months in November.
GBP/USD was last at 1.4934 after falling to 1.4906 earlier, not far from the trough of 1.4893 set on Wednesday.
The Markit services purchasing managers’ index rose to 55.9 last month from Octobers 54.9. Analysts had expected the index to rise to 55.0.
It was the fastest rate of growth since July and new business growth also strengthened to a four month high the report said.
The upturn in service sector growth indicated that the economy would continue to post solid growth in the fourth quarter.
“The survey data so far are pointing to 0.6% GDP growth in the fourth quarter, and no change in average prices charged for goods and services," Chris Williamson, chief economist at survey compilers Markit said.
Sterling was also higher against the weaker euro, with EUR/GBP down 0.37% to 0.7070 as investors waited to see whether the European Central Bank would announce fresh monetary easing measures after its meeting later in the day.
Weak euro zone inflation data on Wednesday hardened expectations that the ECB could announce fresh measures to bolster price growth. At its October meeting ECB head Mario Draghi indicated that more stimulus was a possibility.
Many analysts expect the ECB to cut some deposit rates deeper below zero and to expand the bond-buying program that it launched in March.
Demand for the dollar continued to be underpinned by expectations for a rate hike by the Federal Reserve later this month.
Remarks by Fed Chair Janet Yellen, who said Wednesday that she was "looking forward" to an interest rate increase, highlighted the diverging monetary policy stance between the Fed and other world central banks.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose to 100.37, holding just below the seven-and-a-half month peaks of 100.54 set on Wednesday.