Brexit focus could see pound gains muted for now
The firm's head of G-10 currency research, Valentin Marinov, argues that:
"Somewhat better-than-expected services PMI out of the UK could help boost the pound in the near-term. That said, with no trade-deal Brexit concerns on the rise ahead of the meeting between PM Boris Johnson and EC President Ursula von der Leyen on Wednesday, any gains could remain muted for now."
I reckon that sentiment is largely shared by pound traders at the moment as cable is in the midst of challenging its 100-hour moving average:
Buyers need to break above that in order to sustain any further upside momentum but any suggestion of a move well above 1.3200 just based off the sentiment from the data today alone would be a bit misguided in my view.
The revision to the services reading earlier was good - but it mostly accounts for post-election sentiment - but as long as Brexit uncertainty persists (and I reckon it will) then it is hard to see the pound get a meaningful lift from the data earlier today.
In any case, be on the look out for any commentary after Johnson and von der Leyen's meeting this week and also do take note that the UK parliament will return tomorrow and will be debating further on Johnson's Brexit bill this week.