GBP traded mixed against its major counterparts in the European session on Wednesday. While the pound rose against USD, EUR, JPY, CHF, it weakened against CAD, AUD and NZD, as demand for riskier currencies returned after the Fed Chairman Jerome Powell on Tuesday reiterated his view that inflation pressures would be temporary, easing worries that the U.S. central bank could pull back on economic support soon.

Market participants also received encouraging data from IHS Markit and the Chartered Institute of Procurement & Supply (CIPS), which showed that the UK’s private sector witnessed one of the fastest growth on record in June. According to the survey, the headline seasonally adjusted IHS Markit/CIPS Flash UK Composite Output Index registered at 61.7 in June, down slightly from May's record reading of 62.9 but still pointing to one of the strongest monthly improvements in business activity across the private sector since 1998. The PMI for the services sector slipped to 61.7 in June from 62.9 in the previous month. Economists had forecast the index to increase to 63.0. Meanwhile, the indicator for the manufacturing sector fell to 64.2 from the record of 65.6 seen in May. The reading was in line with economists’ expectations and still pointed to a solid expansion in factory activity, the second-highest since the survey began in January 1992. 

The report also revealed that the rate of input cost inflation accelerated for the fifth month running and was the joint-fastest on record, equal with that seen in June 2008. 

However, market participants do not expect the latest data will have an influence on the decisions of the Bank of England’s policymakers, set to be released tomorrow.