The pound pared back losses on Tuesday after falling sharply earlier amid a fresh deadlock in Brexit talks, but remained on the back foot after data showing that growth in the dominant UK service sector slowed in November.

GBP/USD was at 1.3423 by 04:57 AM ET (09:57 AM GMT), after falling as low as 1.3373 earlier.

Sterling came under pressure after the UK and the European Union failed to reach an agreement on Monday to move to the next stage of Brexit talks.

Sterling found some support following report that British Prime Minister Theresa May could return to Brussels before then end of the week in the hope of reaching an agreement on the Irish border.

With the clock ticking down to the March 2019 exit date, May is under pressure to conclude stage one of the talks in order to start negotiations on future trade ties by the end of the year.

But the pound remained under pressure after data showing that the UK service sector lost some momentum in in November, while inflation pressures continued to increase.

The Markit services purchasing managers’ index fell to 53.8 in November from to 55.6 in October.

The report also showed that prices charged by companies jumped to the highest level since February 2008 last month, adding to concerns over a squeeze on household spending.

The pound also trimmed losses against the euro, with EUR/GBP last at 0.8828, off an earlier high of 0.8867.

In the euro zone, data on Tuesday showed that the economy sustained healthy momentum in November; with the euro zone composite PMI, which measures activity in the manufacturing and service sectors, rising to 57.5 from 56.0 in October. It was the highest reading since April 2011.