Pound Gains after UK Services Activity Expands in July

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Pound Gains after UK Services Activity Expands in JulyThe pound accelerated for the second day versus the euro after data showed that UK services sector expanded faster than expected in July. The UK currency got a boost after Markit Economics reported that its Purchasing Managers’ Index rose to 59.1 in July, compared to June’s reading of 57.7.

The pound rallied 0.3 percent to trade at 79.37 pence per euro as of 10:54 am in London after declining 0.3 percent on Monday. The sterling remained slightly unchanged against the dollar at $1.6871 after touching $1.6814 yesterday, its lowest level since June 12.

“We had a good jump in the price action immediately on the data,” Neil Jones, a London-based head of hedge-fund sales at Mizuho Bank Ltd, told Bloomberg. “We’ve got quite a decent move in euro-sterling, somewhat two-pronged because I think the market appetite is still to sell the euro as well.”

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The 10-year gilt ended a three-day run of gains as yields rose from close to the lowest levels since May 15. The yields on the 10-year gilt advanced 0.02 percentage point or two basis points, to 2.56 percent. The 2.25 percent bond that matures in September 2023 plunged 0.165 to 97.515.

Meanwhile, the Australia’s dollar held steady after the Reserve Bank of Australia retained the record-low interest rate of 2.5 percent on Tuesday. The currency was trading at US93.25 cents after advancing 0.4 percent over the past 2 days.

The Aussie retreated by up to 0.2 percent against the dollar after Markit Economics and HSBC Holdings Plc announced that their measure of China’s services plunged to 50 in July, compared with 53.1 a month earlier. This was the lowest level since November 2005, when the index began to be compiled. China is Australia’s largest trading partner. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com