* Autumn statement expected to show austerity measures
* Euro at 1-mth high versus sterling
* Services PMI due at 0930 GMT to show expansion
By Philip Baillie
LONDON, Dec 5 Sterling hit a one-month low
against the euro on Wednesday as investors braced for grim
economic tidings from the UK's finance minister in his autumn
Losses could be checked, however, if services sector PMI
data, due at 0930 GMT, is stronger-than-expected.
A Reuters poll forecasts the PMI data at 51.1 for November,
which would already be a slight pick-up in growth compared with
50.6 the previous month. A figure above 50 denotes
The euro was up 0.2 percent against the pound in
early trade at 81.45 pence, its highest since Oct 24. and could
see it target the October highs of 81.65 pence.
The pound was flat on the day against the dollar,
trading at $1.6102, though not far from the $1.6131 peak hit on
"The services PMI is expected to rise...we see expansion in
the UK so that should be moderately supportive for sterling,"
said Audrey Childe-Freeman, head of foreign exchange strategy at
BMO Capital Markets.
BMO's Childe-Freeman added the euro's latest gains against
sterling tracked a broad rise in the single currency and the
pair would take further cues from the Chancellor George
Osborne's statement, due around 1230 GMT.
Osborne is likely to paint a darker picture for the UK
economy and commit to further spending cuts for years into the
future - potentially further hampering recovery - in a bid to
save his deficit reduction plan.
Lowered growth forecasts could open the way to more
quantitative easing by the Bank of England, which is negative
for the pound, but if the fiscal austerity programme is relaxed
too much that could also be negative for sterling,
Some analysts said this could bring rating agencies to
question the UK's prized triple-A credit rating, although
opinion is divided, given Osborne is sticking to his
"We think that the autumn statement would reduce the risk of
a potential sovereign downgrade of the UK in coming months. In
turn, this could reinforce the status of sterling as a safe
haven proxy for the euro," Citi told clients in a morning note.