The UK economy grew stronger than expected in January, bringing relief to the central bank from the risk of a prolonged recession.
UK gross domestic product (GDP) rose 0.3% from a 0.5% contraction in December and beat expectations for 0.1% growth, according to data released by the Office for National Statistics (ONS).
This indirectly gives hope to the Bank of England (BOE) that the economy can avoid falling into a prolonged recession or not experience it at all.
Among the main contributors to this strengthening was the increase in the service sector which jumped 0.5% following a fall of 0.8% in the previous month.
While services improved, manufacturing shrank by 0.4% with more than half of its subsectors declining and construction also fell sharply by 1.7%.
Investors will next watch UK jobs data readings next week and inflation in the next two weeks ahead of this month's policy decision by the BOE on March 23.
Market players now expect the BOE to raise interest rates by another 100 basis points to 5% by the end of the year.
The pound's initial reaction saw it rise slightly to around 1.1950 against the greenback.
