• Pound Sterling finds interim support on upbeat S&P Global Services PMI data.
• The UK economy is on the brink of a technical recession.
• BoE’s Pill signals that policymakers are discussing when the central bank could start reducing interest rates.

The Pound Sterling (GBP) recovers in the European session on Monday due to a decent improvement in the UK’s S&P Global/CIPS Services PMI for January. The economic data rose to 54.3, better than expectations of 53.8 and the former reading of 53.4. The agency reported that a robust inflow of fresh orders, strong hiring in the last six months and deepening prospects of rate cuts by the Bank of England (BoE) led to a strong uptick in the Services PMI.

Supportive domestic factors back a sharp recovery in the Pound Sterling. However, the near-term outlook for risk-sensitive assets is bearish. The appeal of safe-haven assets is broadly upbeat as investors see the Federal Reserve (Fed) not rushing to cut interest rates. Receding risks of a recession in the United States due to strong labor and retail demand are allowing plenty of time for Fed policymakers to decide on rate cuts