Aug. 4 (Bloomberg) -- The pound snapped a nine-day surge against the dollar after a report showed U.K. services growth slowed to the lowest in 13 months in July and technical indicators suggested the currency appreciated too quickly. Sterling was close to a one-month high versus the euro after Lloyds Banking Group Plc said it returned to profit for the first time almost two years and a report showed U.K. house prices unexpectedly rose in July. The relative strength index on the pound against the dollar was at 73.238 today, its fourth day above 70, a level that technical analysts say indicates a currency is overbought. “There is a little bit of fatigue in the pound rally and it may pause for a while before testing some of these important levels,” said Audrey Childe-Freeman, a senior currency strategist at Brown Brothers Harriman Ltd. in London. “The news continues to come in on the bullish side for sterling.” The pound was 0.3 percent weaker at $1.5910 as of 3:08 p.m. in London. The nine-day streak of gains was the longest in more than 18 years. The British currency traded at 82.85 pence per euro from 82.94 pence yesterday. It reached 82.55 pence on Aug. 2, the strongest since July 5. Government-controlled Lloyds posted a pretax profit of 1.6 billion pounds ($2.6 billion) in the first half, beating the 694.5 million pound estimate of 17 analysts in a Bloomberg survey. The pound retreated yesterday after touching $1.5969, a Fibonacci level created by the 61.8 percent retracement of the drop from $1.7043 on Aug. 5, 2009 to $1.4231 on May 20 this year. House Prices The pound extended its drop against the dollar after a report showed that service industries in the U.S. expanded in July at a faster pace than forecast. The Institute for Supply Management’s index of non-manufacturing businesses, which covers about 90 percent of the economy, rose to 54.3 from 53.8 in June. Readings above 50 signal expansion. U.K. government bonds fell, pushing the yield on the 10- year gilt up one basis point to 3.29 percent. The two-year gilt yield was two basis points higher at 0.79 percent. Gilts returned 6.3 percent this year, compared with 6.8 percent for German government bonds and 6.7 percent for U.S. Treasuries, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. --Editors: Keith Campbell, Peter Branton. To contact the reporter on this story: Matthew Brown in London at mbrown42@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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