The pound extended its early rally against its major counterparts in the European session on Monday, following a media report that U.K. Prime Minister Theresa May has secured a secret Brexit deal to keep the U.K. in the customs union.
May has reached a deal that would keep the U.K. in a temporary customs union with the EU that would avoid a hard Irish border, according to a Sunday Times report.
The report said that talks are progressing on an agreement on a "future economic partnership," which will permit the U.K. to consider the prospect of a similar free-trade accord to the one Canada has with the EU.
Survey results from IHS Markit and Chartered Institute of Procurement & Supply showed that the UK service sector registered the slowest rate of expansion since March.
The Purchasing Managers' Index dropped more-than-expected to 52.2 in October from 53.9 in September. The expected level was 53.4.
The currency has been trading higher against its major counterparts in the Asian session.
The pound recovered to 147.43 against the yen, from a low of 146.87 hit at 4:30 am ET. The currency is thus heading to pierce its early 2-week high of 147.45. If the pound rises further, it may challenge resistance around the 149.00 level.
The latest survey from Nikkei showed that Japan services sector activity continued to expand in October, and at a faster rate, with a PMI score of 52.4.
That's up from 50.2 in September, and it moves back above the boom-or-bust line of 50 that separates expansion from contraction.
Having dropped to 1.2968 against the greenback at 4:30 am ET, the pound reversed direction and advanced to 1.3027. The pound is likely to find resistance around the 1.32 level.
After falling to 1.3030 against the franc at 4:30 am ET, the pound changed its course and extended its early gains to hit near a 3-week high of 1.3084. The pound is seen finding resistance around the 1.32 region. Resuming its early rally, the pound spiked up to near a 4-week high of 0.8737 against the euro. This follows a low of 0.8772 touched at 1:00 am ET. On the upside, 0.86 is possibly seen as the next resistance level for the pound.
Survey data from Sentix showed that Eurozone's investor sentiment eroded for a third consecutive month in November to its lowest level in two years.
The Sentix investor confidence indicator dropped to 8.8 from 11.4 in October. The latest reading, which matched economists' expectations, was the lowest since October 2016.
Looking ahead, U.S. ISM non-manufacturing composite index for October is due in the New York session.