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Pound leaps to six-week high after upbeat UK PMI data

Pound leaps to six-week high after upbeat UK PMI data

The pound traded near its highest level in six weeks versus the U.S. dollar on Friday after a report showing U.K. business activities hit five-year high at the beginning of the third quarter.

The GBPUSD touched a high of 1.2773, the highest since June 10, extending its advance for a sixth straight session. Now, the pound is set for its third weekly gain in four weeks.

Versus the euro, the pound soared for the first time in four session to 0.9095 despite a report showing that eurozone economic activity rose for the first time since February.

Flash PMI data released today from the U.K. showed a marked improvement to 57.1 compared to 47.7 in June, which was the strongest pace of growth in 61 months.

The progress largely reflected the increased return to work and reopening of the wider UK economy after lockdowns to contain the spread of the Covid-19 pandemic.

Today’s advance in the PMI figures suggested Britain's economy would return to growth in the third quarter after contracting by more than 25% in March and April, said Chris Williamson, chief business economist at IHS Markit.

In the euro area, the PMI Composite index registered 54.8 in July, up from 48.5 in June, recording the fastest pace of growth for 25 months.

Later in the day, the flash PMI composite may signal a return to growth to 50.8 in July after a reading of 47.9 in June.

Recently, the dollar index has been under pressure amid hopes of having a safe vaccine by Christmas and after upbeat economic reports from major economies that raised forecasts of experiencing a V-shaped recovery.

Oppositely, the euro has rallied versus major currencies on improvement in risk sentiment, especially as EU leaders agreed to a €750 billion Recovery Fund earlier this week.

Brexit jitters deprived the pound from having gains similar to the euro, with the UK and EU still some way off a trade deal.

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