EUR/GBP pulls back to 0.8625 with the Pound trimming losses after Wednesday’s sell-off

• The Pound pares some losses as UK Gilts rebound and UK Services activity beats estimations.
• The Euro pulls back from highs despite better-than-expected HCOB Services PMI numbers.
• On Wednesday, revived concerns about UK finances sent the Pound tumbling.

The Euro is trading lower against the British Pound on Thursday, retreating from the 3 ½ month highs at 0.8670 hit on Wednesday as the uncertainty about Chancellor Rachel Reeves revived concerns about the UK’s fiscal health.

UK Prime Minister, Keir Starmer, was forced to show the Government’s support to Rachel Reeves on Wednesday, as her tearful image at the parliament, following diverse U-turns on welfare policies, opened a multi-billion hole in her team’s budget plans.

UK Gilts are showing a significant rebound on Thursday following Wednesday’s sell-off, which is providing some support to the British Pound.

In the macroeconomic front, the UK S&P Global Services PMI has been revised higher to 52.8, from the preliminary estimation of 51.3, which points to the strongest activity in almost a year.

These figures are contributing to improving confidence in the UK economy and have offset the impact of better-than-expected services activity figures in the Eurozone. The region’s services sector returned to growth in June, featuring a 50.5 reading in the HCOB Services PMI, following a 49,7 reading in May, and improving the 50.0 level previously estimated.