Pound Recovers As U.K. Service Sector Growth Improves

The pound erased its early losses against its major rivals in European morning deals on Friday, as U.K. services PMI expanded more-than-expected in June, following a temporary lull in May linked to the recent election.

The headline Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index rose to 58.5 in June from a five-month low of 56.5 in May. It was forecast to rise to 57.5.

Data suggests that the second quarter of 2015 was the strongest on average since the third quarter of 2014.

European stocks are trading in a negative territory, as investors became cautious ahead of Sunday's referendum in Greece that could seal the country's fate in the euro zone. Opinion polls on Greece's bailout referendum point to a closely balanced result with a slight majority in favor of accepting the creditors' latest proposals.

In a television interview broadcast, Greek Prime Minister Alexis Tsipras has called on Greeks to vote "no" in the referendum, which he claimed is not an up or down vote on Greece's membership in the Eurozone. Tsipras argued that voting against the proposals offered by creditors would give the government more leverage in the negotiations.

The pound was trading in a negative territory against most major rivals in the previous session.

In early European deals, the pound recovered to 192.45 against the yen, after having fallen to a 3-day low of 191.77 at 8:30 pm ET. The next possible resistance for the pound-yen pair is seen around the 195.00 mark. At yesterday's close, the pair was worth 191.94.

The latest Nikkei Services PMI showed that the services sector in Japan continued to expand in June, and at a faster rate, with a score of 51.8.

That's up from 51.5 in May, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

The pound edged up to 1.5638 against the greenback, off early low of 1.5601. Continuation of the pound's uptrend may lead it to a resistance around the 1.58 mark.

The pound, having fallen to a session's low of 0.7118 against the euro at 4:15 am ET, reversed direction with the pair trading at 0.7102. If the pound continues its uptrend, 0.70 is possibly seen as its next resistance level.

Final data from Markit showed that Eurozone economic growth rose to a four-year high in June.

The final composite output index rose to 54.2 in June from 53.6 in May and fractionally above the flash score of 54.1.

The pound bounced off slightly against the franc, trading at 1.4713, coming off from an early 2-day low of 1.4690. Next key resistance for the pound may be located around the 1.48 zone.

The U.S. markets will be closed in observance of Independence Day.