The British pound strengthened against major currencies during the European session on Monday, supported by stronger-than-expected private sector growth in the United Kingdom. The latest data from S&P Global indicated that economic activity picked up in March, driven primarily by a surge in the services sector.
According to preliminary figures, the UK’s flash composite output index rose to 52.0 in March, up from 50.5 in February, marking the fastest pace of growth since September 2024. This also marked the seventeenth consecutive month that the index has remained above the key 50.0 threshold, which separates expansion from contraction.
The services sector was the standout performer, with the Services Purchasing Managers’ Index (PMI) climbing to 53.2 in March—its highest reading in seven months—compared to 51.0 in February. The reading also exceeded market expectations of 51.2, reflecting growing momentum in the UK’s dominant services economy.
In contrast, the manufacturing sector continued to struggle. The Manufacturing PMI dropped to 44.6, an 18-month low and below the February reading of 46.9. Analysts had expected a slight recovery to 47.3. The decline in manufacturing output was the sharpest since October 2023, but the robust performance in services more than offset the industrial slowdown.
Market sentiment also responded to global trade developments, with investors monitoring statements from U.S. President Donald Trump, who indicated there could be "flexibility" in his reciprocal tariff plan. He is expected to hold discussions on tariffs with Chinese President Xi Jinping, which may influence broader market trends.
In currency markets, the pound climbed to a four-day high of 0.8360 against the euro and 1.2975 against the US dollar, rebounding from early lows of 0.8385 and 1.2911, respectively. Should the uptrend continue, resistance levels are seen near 0.82 versus the euro and 1.31 against the dollar.
The pound also rose to a five-day high of 194.02 against the Japanese yen, up from 193.27 earlier in the session. Further gains could take the pair toward the 196.00 resistance zone. Additionally, GBP/CHF edged up to 1.1433 from 1.1408, with the next resistance seen around 1.15.
Looking ahead, investors will shift focus to key economic releases from North America, including Canada’s February manufacturing sales, the Chicago Fed National Activity Index, and the US S&P Global PMI data for March.
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