LONDON, March 3 Reuters The pound rose on Friday, boosted by data that showed business activity expanded at its fastest pace in eight months in February, which added to the view among investors that UK rates will continue to rise beyond March.

The final version of the SP GlobalCIPS UK services Purchasing Managers39; Index PMI increased to 53.5 last month, up from 48.7 in January, the strongest rate of growth since June last year. Any reading above 50 represents an expansion.

SP Global said the recovery in business activity in the services sector, which grew for the first time since August, was partly linked to expectations of interest rates peaking.

Sterling rose 0.4 against the dollar to 1.199 and gained 0.3 versus the euro to trade at 88.45 pence.

The pound has risen by almost 1 this week, supported by a shift up in expectations for UK rates, and in part by Britain reaching an agreement with the European Union on postBrexit trading rules for Northern Ireland.

Financial markets expect the Bank of England39;s main rate to top out at 4.75 in August, up from 4.0 now and up from expectations for a peak around 4.0 a month ago.

BoE chief economist Huw Pill on Thursday said Britain39;s economy is showing slightly more momentum than expected and pay growth is proving a bit faster than the central bank forecast last month, helping underpin expectations that UK rates won39;t peak quite yet.

Yesterday Bank of England chief economist Huw Pill said that inflation risks in the…