Investing.com - The pound advanced to session highs against the dollar and the euro on Tuesday after data showed that activity in the dominant U.K. services sector expanded at the fastest rate in 16 years in October.
GBP/USD hit 1.6042 during European morning trade, the highest since Friday; the pair subsequently consolidated at 1.6032, gaining 0.40%.
Cable was likely to find support at 1.5947, the session low and resistance at 1.6100.
Markit said the U.K. services purchasing managers index rose to 62.8 in October up from 60.3 in September, the sharpest rise in activity since May 1997. Economists had been expecting the index to tick down to 59.8.
The new orders component of the index rose to 63.4 in October from 60.6 in September, the fastest inflow of orders since the survey began in July 1996.
“The UK economic recovery moved up a gear again in October," Chris Williamson, chief economist at Markit said.
“Historical comparisons of the PMI against gross domestic product suggest the latest survey data are consistent with a 1.3% quarterly rate of GDP growth, up sharply from previous quarters,” he added.
Meanwhile, the dollar remained under pressure after comments by Federal Reserve officials on Monday indicated that the bank is likely to keep its stimulus program in place for some time to come.
Federal Reserve Bank of Boston President Eric Rosengren said bank should keep its asset purchase program in place until there is "compelling evidence of a sustainable recovery making satisfactory progress toward full employment."
Sterling rose to five-week highs against the euro, with EUR/GBP dropping 0.70% to 0.8404.
The single currency looked likely to remain broadly weaker in the run-up to Thursday’s European Central Bank meeting after weak euro zone inflation data last week raised concerns that the bank will cut rates in order to safeguard the economic recovery in the region.
GBP/USD hit 1.6042 during European morning trade, the highest since Friday; the pair subsequently consolidated at 1.6032, gaining 0.40%.
Cable was likely to find support at 1.5947, the session low and resistance at 1.6100.
Markit said the U.K. services purchasing managers index rose to 62.8 in October up from 60.3 in September, the sharpest rise in activity since May 1997. Economists had been expecting the index to tick down to 59.8.
The new orders component of the index rose to 63.4 in October from 60.6 in September, the fastest inflow of orders since the survey began in July 1996.
“The UK economic recovery moved up a gear again in October," Chris Williamson, chief economist at Markit said.
“Historical comparisons of the PMI against gross domestic product suggest the latest survey data are consistent with a 1.3% quarterly rate of GDP growth, up sharply from previous quarters,” he added.
Meanwhile, the dollar remained under pressure after comments by Federal Reserve officials on Monday indicated that the bank is likely to keep its stimulus program in place for some time to come.
Federal Reserve Bank of Boston President Eric Rosengren said bank should keep its asset purchase program in place until there is "compelling evidence of a sustainable recovery making satisfactory progress toward full employment."
Sterling rose to five-week highs against the euro, with EUR/GBP dropping 0.70% to 0.8404.
The single currency looked likely to remain broadly weaker in the run-up to Thursday’s European Central Bank meeting after weak euro zone inflation data last week raised concerns that the bank will cut rates in order to safeguard the economic recovery in the region.