While the Pound began local trading slightly softer against the US Dollar, the British asset clung on to yesterday’s gains against the Euro prior to the release of UK services PMI.
The Pound Sterling to US Dollar Exchange Rate was in the region of 1.6036 as of 10:30 GMT.
Whilst last week’s UK manufacturing report came in slightly below forecasts, yesterday’s construction report was encouraging and economists had forecast that a gauge of services would show a 10th month of expansion today.
In fact, the services report actually beat expectations with the measure coming in at 62.5 in October, up from 60.3 in September and significantly higher than the 60.0 predicted.
In the immediate aftermath of the data release the Pound surged to an over four-week high against the Euro and rallied against the US Dollar.
Gains against the Euro were aided by the news that producer prices in the Eurozone gained by less than expected in September.
1 US Dollar is currently worth 0.6239 pence
In a statement accompanying the UK services PMI Markit economist Chris Williamson observed; ‘The UK economic recovery moved up a gear again in October, with the PMIs indicating record growth of output and employment. The all-sector PMI, measuring business activity across the UK private sector economy, hit an all-time high of 61.5 in October, up from 60.2 in September.’
Williamson continued; ‘Manufacturing, services and construction all continued to see very strong rates of expansion, pointing to an ongoing broad-based upturn. […] The buoyant survey data are likely to encourage the Bank of England to raise its forecasts for economic growth when it publishes its new projections in November.’
The services sector growth was the fastest rate of expansion for 16 years.
The Pound had been knocked earlier in the European session by the news that while UK retail sales increased slightly in October, month-on-month, gains were limited due to the mild weather restricting consumer demand.
British Retail Consortium figures showed that like-for-like sales advanced by 0.8 per cent from September to October following a previous monthly gain of 0.7 per cent. Economists had expected a 1.1 per cent advance. The result prompted this result from industry expert David McCorquodale; ‘October was another difficult month for retailers, reminding us that recovery is a slow, relentless slog.’
However, today’s impressive services report helped Sterling wipe out any earlier losses and the British asset advanced on the majority of its most traded peers as the European session progressed.
If today’s US ISM non-manufacturing report shows the decline expected the Pound/US Dollar pairing could climb further.
Economists will also be looking ahead to tomorrow’s industrial and manufacturing production reports for the UK.
Current Pound Sterling (GBP) Exchange Rates:
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6036 >
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1896 >
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.6932 >
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9284 >
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6239 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8408 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5935 <
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5189 >
(As of 10:30 GMT)
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