FX round-up: Bounce in pound stalls ahead of major risk events

The pound continued to grind higher versus the US dollar, propelled by a much better-than-expected reading on the UK services sector, which accounts for the lion's shares of economic activity in the country.

IHS Markit's service sector Purchasing Managers' Index jumped from a reading of 54.5 for May to 55.2 in June, easily surpassing forecasts that had been calling for a reading of 54.5.

Unsurprisingly, as of 2006 BST cable, as traders referred to the currency pair, was ahead by 0.33% to 1.32371.

To take note of, earlier in the session Michael Hewson, chief market analyst at CMC Markets UK, had said: "the rebound on Friday could well see a move higher given it had the look of a bullish reversal, after last week's low at 1.3050.

"The lack of follow through on the downside below 1.3100 makes the pound susceptible to short squeeze. The next resistance comes in at the 1.3220 area with a break targeting 1.3340."

Nevertheless, traders were still waiting on the release of what is considered to be the 'all-important' monthly US jobs report on Friday. Then there was the result of the Prime Minister's meetings with her Cabinet at Chequers to contend with.

Another factor to watch, on Friday as well, was the deadline for the US to impose tariffs on $34bn-worth of Chinese goods and the likely reaction from Beijing.

Trading on the other main crosses was subdued on Wednesday, what with US markets closed for the 4 July holiday.

Euro/dollar was up by just 0.08% to 1.16676 and dollar/yen down by 0.09% at 110.466.