UK gilts gain despite better-than-expected May services PMI; BoE Gov Carney’s speech eyed

The United Kingdom’s gilts gained during European session Wednesday despite a better-than-expected result in the country’s services PMI for the month of May, released, early today. Investors remain keen to watch the Bank of England (BoE) Governor Mark Carney’s speech, due on June 6 by 09:00GMT for some additional direction in the debt market.

The yield on the benchmark 10-year gilts, suffered 2 basis points to 0.882 percent, the super-long 30-year bond yields slumped 2-1/2 basis points to 1.468 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points lower at 0.593 percent by 09:25GMT.

At 51.0 in May, up from 50.4 in April, the seasonally adjusted IHS Markit/CIPS UK Services PMI Business Activity Index registered above the 50.0 no-change mark for the second month running. The latest reading signalled a marginal rise in service sector output, with the rate of expansion the strongest since February.

Further, at 50.7 in May, the seasonally adjusted All Sector Output Index dropped from 50.9 in April. A sharp slowdown in manufacturing production growth and lower construction output more than offset an improvement in service sector business activity. Nonetheless, the All Sector Output Index remained above the crucial 50.0 no-change value for the second month running.

Meanwhile, the FTSE 100 remained tad o,34 percent higher at 7,237.75 by 09:30GMT, while at 09:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at -37.07 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex