The British currency climbed against the dollar on Wednesday after data showed that activity in the U.K. service sector recovered in October. The upside was limited as the greenback was supported ahead of economic reports from the U.S.
Markit reported that the U.K. services purchasing managers index climbed to 54.9 in October from September’s 28-month low of 53.3, and beating forecasts for a reading of 54.5.
GBP/USD reached highs of 1.5445 following the release, up from around 1.5410 earlier. Cable was last seen at 1.5414.
EUR/GBP was last seen at 0.7094, down 0.23%.
The report came after similar surveys of the manufacturing and
construction sectors earlier in the week indicated that the rate of
economic growth picked up at the start of the fourth quarter, which spurred a talk that the Bank of England may tighten earlier than the Federal Reserve.
Chris Williamson from Markit commented:
"The survey data point to GDP rising at a quarterly rate of 0.6% at the start of the fourth quarter, up from 0.5% in the third quarter."
Meanwhile, the dollar held higher ahead of important U.S. reports with EUR/USD last seen at 1.0934, down 0.27%.
Market players now await the U.S. to release the ADP jobs report for October at 8:15 am Eastern Time Wednesday, followed by data on the trade balance at 8:30 am.
At 10:00 am, the U.S. Institute of Supply Management is to issue a report on service sector growth for October.
Market participants are also focusing on Friday's U.S. nonfarm payrolls report. The data is expected to show jobs growth of 182,000 in October, after an increase of 142,000 in September, while the unemployment rate is expected to hold steady at 5.1%.
A robust nonfarm payrolls report is likely to boost speculation over the timing of the Fed rate increase.
