Investing.com - U.K. service sector activity expanded at the slowest rate in more than two years in August, dampening optimism over the health of the economy and dimming prospects for higher interest rates, industry data showed on Thursday.
In a report, market research group Markit said the seasonally adjusted Markit/CIPS Services Purchasing Managers Index declined to 55.6 last month from a reading of 57.4 in July. Analysts had expected the index to rise to 57.6 in August.
On the index, a level above 50.0 indicates expansion in the industry, below 50.0 indicates contraction.
Growth of business activity moderated for the second month running, primarily as a result of the slowest increase in new business since April 2013.
Commenting on the report, Chris Williamson, Chief Economist at survey compilers Markit said, “The economy looks set to grow by 0.5% in the third quarter, down from 0.7% in the three months to June."
GBP/USD was trading at 1.5257 from around 1.5261 ahead of the release of the data, while EUR/GBP was at 0.7366 from 0.7359 earlier.
Meanwhile, European stock markets remained higher. London’s FTSE 100 rose 1.6%, the EURO STOXX 50 rallied 1.3%, France's CAC 40 advanced 1.35%, while Germany's DAX climbed 1.6%.