The pound fell on Monday. UK Construction PMI, released first thing, was better than expectations printing at 52.5 vs. 52.0 and GBP/USD came close to breaking 1.34 on the news. Alas, it couldn’t quite make it, and then duly broke down through various support levels, losing close to 100 points on the day.
The war of words on US trade tariffs rumbled on too with Theresa May calling US tariffs “unjustified and deeply disappointing”. In other news, May is also set to delay the release of a Brexit white paper until after the EU summit at the end of June. Reports also revealed that the House of Commons will vote on the Brexit bill on 12th June, which gives them the opportunity to discuss 15 separate amendments made by the House of Lords. These headlines are hardly positive for the pound and GBP/USD has struggled to recapture any gains since the sell-off yesterday.
Attention now turns to UK Services PMI. Based on yesterday’s performance we can’t be sure that a beat will be necessarily good for the pound, albeit we could see an initial reaction. Also based on yesterday’s performance, expect any gains to be capped at 1.34, or at least just under the big figure.