Selling pressure held firm on the pound yesterday, with the euro price falling below €1.08

The pound was unable to capitalise on improved services data, eventually losing over half a cent to a broadly stronger euro.

• The pound initially found some respite as positive data from the services sector bolstered expectations that the economy resumed growth in the third quarter.
  
• The purchasing managers’ index for the services sector showed a rise to 55.3 in September, showing improvement from last month and exceeding market expectations.
  
• However, sterling quickly relinquished its gains over expectations that the MPC meeting later this week will reaffirm that the UK monetary policy will remain comparatively loose for some time.
  
• Rallying global equity markets also benefitted euro strength, with the corresponding rise in risk appetite failing to buoy demand for the fragile UK currency.
  
• Pressure is likely to remain high on the pound today if data released at 09:30BST follows market expectations, and shows a month-on-month fall in UK manufacturing production.