GBP/USD fell to a low of 1.2970 but has recovered to 1.2990 levels now
Although much of the shine has been taken away from the weekend’s Brexit deal optimism, it’s just that there has been plenty of talk about it emerging that is helping to give rise to hope and positive vibes on a potential deal to come later this month. All hopes now reside with what Theresa May can convince parliament of tomorrow, but we’ll only know when tomorrow comes.
For now, UK economic data disappointed once again with October’s services PMI print falling to a seven-month low and the composite PMI print recording its weakest reading since July 2016. The details don’t make it look better as business expectations fell from 66.4 in September to 63.1 in October. That’s the weakest reading since July 2016 as well.
A lot of this can be blamed on the global trade situation but part of the blame is also Brexit uncertainty. The BOE must be really hoping that a lot of this uncertainty gets flushed away once a Brexit deal is resolved, otherwise the central bank will have a tough time looking for reasons to commit to another rate hike in 2019.
As for price action in the pound, whatever that’s left on the optimism from a Brexit deal from the weekend is looking to help provide a cushion for any losses today at least. And we’re seeing that in GBP/USD as it recovers from the lows to attempt a move back towards 1.3000 again.
I don’t expect price to spike and run up towards the highs during the opening today – unless Brexit headlines allow for it – but the pound should remain underpinned as hopes for something to get done this week are yet to be dashed away.
All eyes will be on May in parliament tomorrow, so let’s see what the rumour mill has to churn out in the mean time.