The pound’s upward trajectory was checked by the release of weaker than expected UK Services PMI data yesterday, which printed at 52.2 vs. 53.4, evidencing that business activity in the country’s dominant services sector has slowed to a seven-month low. Cable slipped back below 1.30 on the news. Also, some reports and suggestions that any potential US/China trade deal was mostly a lot of hot air, also weighed on risk appetite and was a contributing factor for the mild sell-off in the GBP/USD pair.
However, there was some good demand under the big 1.30 figure and come the late afternoon session, GBP/USD had forced its way through the 100 day moving average at 1.3035, supported by an underlying positive feeling amongst investors that a Brexit deal was close.
This positivity has intensified this morning, ahead of Theresa May’s Cabinet meeting today. There are some reports suggesting that she will give ministers an ultimatum to back a draft deal, which includes agreement on a the Irish border issue. GBP/USD is now trading at its highest level since 22nd October, flirting with a break of 1.31 ahead of the meeting, and we will no doubt see some further volatility today as the rumours and headlines gain momentum ahead of/and post cabinet meeting.