Pound Spikes Up As Polls Suggest Tory Victory

The pound appreciated against its major counterparts in early European deals on Wednesday, as latest opinion polls suggested the ruling Conservative party securing a majority at the upcoming general election on December 12.

Survey by YouGov for The Times and Sky News showed Tuesday that Tories had maintained its nine-point lead over the opposition Labour Party.

The poll showed that Tory lead has fallen one point to 42 percent, while Labour was also down one point at 33 percent.

The survey was conducted between December 2-3.

It came after a Kantar poll put a 12 point lead for the Tories, at 44 percent, as against 32 percent for Jeremy Corbyn's party.

Survey results from IHS Markit and Chartered Institute of Procurement & Supply showed that the UK service sector contracted the most in eight months in November but the pace of decline was slower than initially estimated.

The final services Purchasing Managers' Index fell to 49.3 in November from 50.0 in October. Although the reading was above the flash reading of 48.6, the index signaled the steepest drop since March.

Sentiment improved as encouraging Chinese data helped investors shrug off concerns surrounding U.S.-China trade talks.

A report showed that activity in China's services sector accelerated to a seven-month high in November, hinting at short-term stabilization in the world's second-largest economy.

The currency held steady against its key counterparts in the previous session, except the yen.

The pound climbed to an 8-1/2-month high of 0.8481 against the euro, from a low of 0.8530 seen at 2:30 am ET. Next near term resistance for the pound is seen around the 0.83 level.

Final survey data from IHS Markit showed that the euro area private sector growth remained the lowest in six-and-a-half years in November, signaling modest expansion for the fourth quarter.

The composite output index held steady at 50.6 in November. The reading was slightly above the flash estimate of 50.3.

The pound firmed to a 2-day high of 1.2911 against franc, up from Tuesday's closing value of 1.2822. If the pound rises further, 1.31 is likely seen as its next resistance level.

The U.K. currency rallied to 1.3063 against the dollar, its biggest since May 6. The pair had ended Tuesday's trading at 1.2994. The pound is seen locating resistance around the 1.32 level.

After falling to a weekly low of 140.83 at 2:15 am ET, the pound reversed direction, approaching near a 7-month high of 142.04 versus the yen. The pound may find resistance around the 144.00 level.

The latest survey from Jibun Bank showed that Japan services sector moved back into expansion in November, albeit barely, with a PMI score of 50.3.

That's up from 49.8 and it moves back above the boom-or-bust line of 50 that separates expansion from contraction.

Looking ahead, at 8:15 am ET, ADP private payrolls data for November is set for release.

The Bank of Canada's interest rate decision is scheduled for release at 10:00 am ET. Economists expect the benchmark rate to be kept unchanged at 1.75 percent.

Simultaneously, ISM services PMI for November will be featured.