Weak UK data brought the pound down yesterday, but it is recovering losses this morning

Sterling fell by 0.6% against the single currency yesterday after a survey showed Britain's services sector grew more slowly than expected in November.

• The Chartered Institute of Purchasing and Supply activity index fell to 56.6 last month from October's two-year high of 56.9. That was the seventh consecutive month above the 50 level, which indicates expansion, but below expectations for a rise to 57.0
  
• As the services sector is regarded as the driving force of the UK economy, any hesitation in its expansion causes concern for the UK economy and is therefore sterling negative.
  
• The euro received a boost in the afternoon after the ECB announced that it would start to remove loose monetary policies, telling reporters that "not all our liquidity measures are needed to the same extent as in the past."
  
• Trichet hinted about an exit strategy so the knee-jerk reaction was euro positive, but he was explicit in reiterating that the withdrawal of stimulus did not signal a change in interest rates, which capped gains.
  
• This morning the pair is continuing to trade within range, with the price currently hovering back over 1.10.