London Markets: British pound flirts with $1.29 as service sector flat in October

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The British pound tested the $1.29 level on the downside on Tuesday as a measure of the British service sector steadied in October, suggesting activity growth remained sluggish.

The IHS Markit/CIPS U.K. services PMI rose to the 50 mark in October from 49.5 in September. Economists had expected a reading of 49.7.

Service providers reported lower intakes of new business for the second month running in October, and seventh time in 10 months, but the 12-month outlook for service sector activity improved to a three-month high in October, as some firms mentioned that uncertainty would be reduced following any resolution to Brexit in early-2020.

The pound GBPUSD, +0.1397%  traded as high as $1.2916, and recently was at $1.2898 vs. the $1.2882 close on Monday.

The FTSE 100 meanwhile joined the global stock-market rally on optimism over a possible U.S.-China trade pact, with oil giants BP BP, +1.88%   and Royal Dutch Shell RDSA, +1.17%  both advancing. The FTSE 100 UKX, +0.33%  rose 0.31% to 7392.17.

Associated British Foods ABF, +4.71%   climbed nearly 5% as the Primark owner reported better-than-forecast annual profit and guided for a small decline in U.K. margins in the next fiscal year.

“Assuming 12x EBITDA for Grocery, the implied EBITDA multiple of Primark at <8x seems harsh, which is a multiple close to M&S MKS, -1.03%   and a discount to Next NXT, +0.12%  ,” said analysts at Barclays.