News Column

Pound Recovers As UK Services PMI Beats Forecast

September 3, 2014

BRUSSELS (Alliance News) - The pound recovered from its early lows against the other major currencies in the early European session on Wednesday, after data showed that British service sector activity grew at the strongest pace in ten months during August amid favorable market conditions and new business growth.

Data from the Chartered Institute of Purchasing & Supply and Markit Economics showed that the services Purchasing Managers' Index climbed to 60.5 from 59.1 in July. Economists had forecast a score of 58.5. A PMI reading above 50 suggests expansion in the sector.

The pound rose to 0.7967 against the euro, from an early near 2-week low of 0.7985. If the pound extends its uptrend, it is likely to find resistance around the 0.80 area.

Data from Markit Economics showed that Eurozone's composite purchasing managers' index, or PMI, was revised downwards in August. The Markit PMI composite output index was revised to 52.5 in August, less than the flash estimate of 52.8. In July, the index was at 53.8.

Moving away from an early near 6-month low of 1.6443 against the US dollar, the pound edged up to 1.6491. At yesterday's close, the pound was trading at 1.6467 against the greenback. The pound is likely to find resistance around the 1.67 region.

Against the yen, the pound edged up to 173.29, from an early 2-day low of 172.69 . The pair was quoted at 173.05 at yesterday's close. Continuation of bullish trend may lead the pound to a resistance around the 174.62 mark.

Data from Markit Economics showed that the services sector in Japan contracted in August with a purchasing managers' index score of 49.9. That was down from 50.4 in July, and it slipped below the boom-or-bust score of 50 that separates expansion from contraction.

The pound edged up to 1.5159 against the Swiss franc, from an early near 2-week low of 1.5123. The pair closed Tuesday's trading at 1.5133. On the upside, 1.53 is seen as next resistance level for the pound.

Looking ahead, US factory orders data for July and Federal Reserve's Beige Book Report are scheduled to be released in the New York session.

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Source: Alliance News

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