Pound Higher After UK Service Sector Growth Climbs To 10-month High

17:30, 5th December 2016

(RTTNews) - The pound was firmer against its most major rivals in the European session on Monday, amid rising risk appetite and as British service sector grew for a fourth straight month in November at its fastest pace in ten months amid rising employment.

Survey data from IHS Markit and the Chartered Institute of Procurement & Supply showed that the purchasing managers' index for the services sector rose to 55.2 from 54.5 in October.

Latest reading signaled the fastest expansion since January and the rate of growth was broadly in line with the 20-year long-run survey average, IHS Markit said.

Meanwhile, the latest growth indicator from the Confederation of British Industry showed that the U.K. private sector growth remained steady in the three months to November.

The index measuring the pace of growth in the private sector rose to +9 percent from +8 percent in three months to October.

The currency was underpinned by rising European shares, as investors appeared to shrug off the result of the Italian referendum and subsequent resignation of Prime Minister Matteo Renzi.

The currency has been trading in a positive territory in the previous session.

The pound remained near an early 2-month high of 1.2744 against the greenback, following a low of 1.2625 hit at 5:45 pm ET. The next possible resistance for the pound-greenback pair may be seen around the 1.32 mark.

The pound climbed back to 1.2911 against the Swiss franc, just few pips short to pierce its early near 3-month high of 1.2914. On the upside, 1.34 is likely seen as the next resistance for the pound-franc pair.

The pound advanced to a 5-1/2-month high of 145.55 against the Japanese yen, off its early 5-day low of 142.51. If the pound-yen pair extend rally, 148.5 is possibly seen as its next resistance level.

Survey figures from Cabinet Office showed that Japan's consumer confidence declined for the second straight month in November to the weakest level in six months.

The seasonally adjusted consumer confidence index fell to 40.9 in November from 42.3 in the previous month. In September, the reading was 43.0.

On the flip side, the pound that advanced to a 4-1/2-month high of 0.8305 against the euro at 11:00 pm ET reversed direction and was trading lower at 0.8377. The pound is seen finding support around the 0.86 mark.

Survey results from IHS Markit showed that the euro area private sector expanded at the fastest pace in 11 months in November but the pace of growth was slightly weaker than initially estimated.

The final composite output index rose less-than-estimated to 53.9 in November from 53.3 in October. The flash score was 54.1.

Looking ahead, at 8:30 am ET, the Federal Reserve Bank of New York President William Dudley speaks about the economy and monetary policy in New York.

Markit's U.S. final services PMI, ISM non-manufacturing composite index and labor market conditions index for November are due in the New York session.

The Federal Reserve Bank of St. Louis President James Bullard will speak about the US economic outlook at the Arizona State University's annual economic forecast luncheon in Phoenix at 2:05 pm ET.