LONDON, Jan 4 Reuters Sterling surged on Thursday after data showed British borrowers increased demand for loans, while a separate business survey showed a more resilient than feared economic picture.

Bank of England BoE data showed on Thursday net borrowing by British consumers was the highest in nearly seven years in November and lenders approved the most mortgages since June, in a sign households were mostly coping with high interest rates.

A separate survey, the final SP GlobalCIPS UK Services Purchasing Managers39; Index PMI, showed Britain39;s services firms grew more strongly in December than initially thought and optimism hit a sevenmonth high.

The composite PMI, which combines the services survey with a weak reading of the manufacturing sector published on Tuesday, reached its highest since May in December, rising to 52.1 from 50.7 in November.

Jeremy Stretch, head of G10 FX Strategy at CIBC Capital Markets, said sterling found some comfort as early BoE rate cut expectations are continuing to be pared.

The large increase in monthly consumer credit, combined with an upgrade to final services PMI provides a more constructive UK macro backdrop, he said.

Sterling was last up 0.23 against the dollar at 1.2690

It rose as much as 0.5 to 1.2728 after the data release, having fallen 0.87 on Tuesday to a threeweek low, in its biggest oneday drop since midOctober.

Traders expect around 140 basis points of rate cuts in 2024, according to money market pricing, not far…