(RTTNews) - The pound that eased after a weaker-than-forecast GDP data showed mixed performance in early trading on Wednesday.
The sterling edged higher against the dollar and the yen as European equities reached in a positive terrain after reports showed that European policy makers are examining ways to safeguard their banks from the sovereign debt crisis.
Thus far, the U.K. FTSE 100 index advanced 2.38 percent, Germany's DAX jumped 3.56 percent and France's CAC-40 index rose 3.2 percent.
German Chancellor Angela Merkel is meeting European Commission President Jose Manuel Barroso today amid intensified efforts by Eurozone leaders to reassure markets, plagued by recession fears.
The talks follow two days of deliberations by European Union leaders, who delayed the loan installment worth EUR 8 billion to Greece, saying that further aid to Greece can be granted only after the troika report on the country's progress with the fiscal targets is submitted in November.
U.K.'s economic growth for the second quarter was revised down to 0.1 percent from 0.2 percent sequentially, data from Office for National Statistics showed today.
On the production front, output of the service and construction industries increased by 0.2 percent and 1.1 percent respectively. At the same time, output of the production industries fell by 1.2 percent, within which manufacturing rose by 0.2 percent. On the expenditure side, household final consumption expenditure fell by 0.8 percent in the second quarter.
Meanwhile, activity in U.K's service sector grew more than economists expected in September, data from a survey by Markit Economics and CIPS showed today.
The seasonally adjusted business activity index for the services sector advanced to 52.9 in September from 51.1 in August, which was the lowest reading in eight months. Economists were looking for a reading of 50.5 in for September.
The pound touched 118.80 against the yen around 6:40 am ET, up from late Asian session low of 118.12. On the upside, the pound may test early Asian session's 2-day high of 119.16.
Japan service sector activity contracted in September, though the pace of decline moderated from a month earlier, a survey by Markit Economics showed today. The headline seasonally adjusted Business Activity Index posted 46.4 in September. A reading below 50 suggests contraction of the sector.
The British currency also advanced to 1.5494 against the US dollar around 6:50 am ET from Asian session's low of 1.5414. On the upside, the cable may target resistance around the 1.55 level in the near-term.
(RTTNews) - On the other hand, the pound slipped to 1.4193 against the Swiss franc around 6:45 am ET from a fresh 4-month high of 1.4278 hit at the beginning of the session. If the pound declines further, it may find support around the 1.4180 level.
The UK currency that advanced to 0.8594 against the euro around 4:25 am ET reversed its course shortly after the GDP report. The pound reached a low of 0.8636 against the euro around 6:40 am ET and hovered in that level thereafter. On the downside, 0.8650 is seen as the next likely target level for the British unit.
Eurozone retail sales were down 0.3 percent month-on-month in August, reversing a 0.2 percent rise in July. The August figure came in line with economists' expectations. On a yearly basis, retail sales fell more than expected by 1 percent in August, following a 0.4 percent drop in July. The consensus forecast called for a decline of 0.7 percent.
Eurozone's composite output index fell to 49.1, signaling first contraction in private sector activity since July 2009, from 50.7 in August. The services Purchasing Managers' Index (PMI) came in at 48.8, down from 51.5 in August and also below the flash reading of 49.1.
Germany's seasonally adjusted business activity index for the services sector came in at 49.7 in September, lower than 50.3 reported in the flash estimates and August's reading of 51.1.
Traders are now likely to focus in the North American session, in which the U.S. ADP employment and ISM non-manufacturing data-both for September are slated for release.
Also, the market is closely looking for tomorrow's central bank decisions from both the U.K. and Europe and Friday's pivotal Non-farm payrolls data from the U.S.
