The British pound was the biggest mover in the European session today, rallying against the US dollar and euro as well as against the yen. The main driver for sterling today was the surprisingly much stronger-than-expected Purchasing Managers Index for the UK services sector, which jumped to a 16-year high of 62.5 in October. Expectations were for a reading of 60.4.
GBPUSD jumped over 80 pips to a session high of $1.6060 from $1.5963, while GBPJPY rose to 157.81 from a low of 156.61. EURGBP fell to 0.8401 from 0.8457.
The euro was little changed against the dollar by the end of the European session. EURUSD is capped just below the key $1.3500 level although it managed to briefly price higher to reach $1.3510.
In economic news, the European Commission lowered its growth forecasts for the Eurozone next year from 1.2 percent to 1.1 percent. This year, growth is expected to shrink 0.4 percent, more than the 0.7 percent contraction in 2012.
With a lack of news to affect the dollar/yen pair, USDJPY ended the session lower at 98.30 yen from the open of 98.43 yen. Focus will be on the upcoming US data on non-manufacturing PMI. Also Friday’s US jobs report will cause a lot of volatility for the dollar.