- Upward revision of UK business activity supports pound
- Concerns recede after budget
- BoE likely to cut rates this month
LONDON, Dec 4 (Reuters) - The pound steadied against the dollar on Thursday after rising over 1% the day before, its biggest daily jump since April, as an upward revision of business activity data painted a brighter picture of the economy.
The pound was last down less than 0.1% at $1.3348 after earlier touching its highest level in over five weeks at $1.33585.
November's S&P Global UK Composite Purchasing Managers' Index, which incorporates both services and manufacturing activity, was revised upwards on Wednesday, supporting the pound.
"The growth outlook doesn't look as muted as it was initially assumed," said Kirstine Kundby-Nielsen, analyst at Danske Bank.
BUDGET WORRIES RECEDE
The pound has jumped in the last week after British finance minister Rachel Reeves's long-awaited budget passed the bond market's test without too much fuss.
Investors had been concerned that Reeves's announcements, which included tax rises and large-scale spending, could have spooked bond investors, pushing yields higher.
But British borrowing costs have fallen since last week's announcement.
"The Labour government didn't really stir markets that significantly," said Danske Bank's Kundby-Nielsen.
"What we've been seeing over the past week is some of that budget risk being priced out."
Analysts also said the budget measures were unlikely to cause a rise in inflation, allowing the Bank of England to lower interest rates in the near term.
Markets are pricing in a 90% chance of a rate cut when the central bank meets later this month.
Against the euro, the pound was little changed at 87.44 pence.
Reporting by Samuel Indyk Editing by Bernadette Baum
Source: Reuters