The British pound today rallied higher against the US dollar after the release of positive Markit/CIPS UK Services PMI data. The stalled recovery in the US dollar also contributed to the pound’s rally against it due to declining US treasury yields.
The GBP/USD currency pair rallied to a high of 1.3286 approaching the key resistance level of 1.3300 from daily lows of 1.3240.
The release of the Markit/CIPS UK Services PMI for September triggered the currency pair’s brief rally as the PMI came in at 53.6, which was higher than the expected 53.2. The pound rallied given the importance of the services sector to the UK economy. The positive Services PMI also compensated for the disappointing Markit/CIPS Manufacturing PMI and the Markit/CIPS Construction PMI, both of which were released earlier this week. The positive services PMI data is likely to raise expectations of a Bank of England rate hike later this year even as its Monetary Policy Committee is scheduled to meet on November 2.
The high selling interest around US Treasury yields also contributed to the pair’s brief rally. The currency pair’s rally was capped by the uncertainty surrounding the Brexit negotiations even as Theresa May is keen on getting a transitional deal for the UK.
It remains to be seen whether the pound shall sustain its gains after the release of US ADP employment change data and the US ISM Services/non-manufacturing composite, as well as Janet Yellen‘s speech, all scheduled for later today.
The GBP/USD currency pair was trading at 1.3284 as at 10:50 GMT having rallied from daily lows of 1.3240. The GBP/JPY currency pair was trading at 149.33 having dropped from a high of 149.55.
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