LONDON: Sterling hit a 3-1/2 month peak against the euro while gilt futures pared gains on Wednesday, after data showed the UK services sector expanding at its fastest pace in more than six years in August.
The data added to growing evidence of a broad-based pick up in the UK economy and bolstered market expectations that the Bank of England may have to tighten policy well before it has flagged.
Sterling rose against the euro after the better-than-expected data. The euro fell to 84.43 pence, its lowest since May 21, and down 0.2 percent on the day. It was trading at 84.52 before the data was released.
Against the dollar, sterling hit a session high of $1.5596 after the UK data, up from $1.5580 beforehand.
December gilt futures briefly pared gains by 10 ticks to hit a session low of 108.35 at 0829 GMT, but then recouped these losses to stand 8 ticks up on the day at 108.44.
Ten-year gilt yields' spread over Bunds was little changed at just over 94 basis points.
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