British sterling has touched 1.2697 versus the US dollar today, its highest in 11 weeks, or since Sunday 30th June. In part, this is because markets are optimistic that there will be a Brexit deal.
However, looking ahead, sterling’s value versus the mighty buck could be influenced, because UK unemployment rose in August, while wage growth eased.
GBP to USD gains, as Barnier calls a deal “difficult but possible”
One reason why the sterling vs US dollar interbank exchange rate has reached this 11-week high is because the EU’s Chief Brexit Negotiator, Michel Barnier, has called an agreement this week “difficult but possible.” This is lifted sterling, because as recently as last Sunday 14th, Mr. Barnier said that he was “baffled” by the UK’s “complex” proposals.
However, to reach a deal in the next few days, the UK and EU must act quickly. For example, France’s EU minister, Amélie de Montchalin, says that: “Time alone is not a solution. However, if a significant political change takes place in the UK then that could potentially justify a discussion on an extension if we asked for it.”
Sterling vs US dollar could be affected, as UK unemployment rises and wage growth slows
However, looking ahead, the pound to US dollar interbank exchange rate may be influenced, because today we learnt that UK unemployment rose by +0.1% to 3.9% in the three months to August, according to ILO. This is marginally above the UK’s 45-year low joblessness rate.
In addition, UK Average Earnings Including Bonuses fell by -0.1% in the three months to August, to +3.8%, below hopes for a rise to 4.0%.
Pound against greenback might be influenced, as US/China may struggle to consolidate trade talks
In addition, looking forward, the sterling vs US dollar interbank exchange rate could be affected, because even though the USA and China made progress in their trade talks last Friday, they may struggle to consolidate these gains.
US Treasury Secretary Steven Mnuchin has warned that, if there’s no trade agreement soon, then Washington will go ahead and imposed previously-planned extra tariffs on Beijing.
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