Pound Rises After Robust U.K. PMI Data

(RTTNews) - The British pound strengthened against other major currencies in the European session on Wednesday, following the release of PMI data that signaled a stronger than estimated growth in private sector in May.

Data from the S&P Global showed that the U.K. Services Purchasing Managers' Index or PMI rose to 50.9 in May, from 49.0 in the previous month. The PMI score was above an earlier flash estimate of 50.2.

Also, the composite PMI increased to 50.3 points in May from 48.5 points in April.

European shares inched higher, as investors braced for a 25-basis point rate cut from the European Central Bank when it meets on Thursday.

In economic releases, data showed Eurozone's services sector contracted modestly in May, with the final PMI Services reading falling to 49.7 from April's 50.1. The U.K. services PMI was finalized at 50.9, up from April's 27-month low of 49.0.

In the European trading today, the pound rose to a 5-day high of 0.8407 against the euro, from an early low of 0.8421. The pound may test resistance around the 0.83 region.

Against the yen and the Swiss franc, the pound advanced to 6-day highs of 195.24 and 1.1154 from early lows of 194.54 and 1.1126, respectively. If the pound extends its uptrend, it is likely to find resistance around 197.00 against the yen and 1.12 against the franc.

The pound edged up to 1.3546 against the U.S. dollar, from an early low of 1.3501. On the upside, 1.37 is seen as the next resistance level for the pound.

Looking ahead, U.S and Canada PMI data for May, U.S. MBA mortgage approvals data, U.S. ADP private-sector employment for May, Canada labor productivity data for the first quarter, U.S. EIA crude oil data and U.S. Fed Beige Book report are slated for release in the New York session.

At 9:45am ET, the Bank of Canada will announce its overnight rate decision. The central bank is expected to remain unchanged at 2.75 percent.

Following the post-policy decision, the BoC Governor Tiff Macklem is scheduled to speak at 10:30 am ET.