Fresh No-Deal Brexit Concerns Weigh on Pound
The pound to US dollar rate began the week above the 1.30 level, before falling to 1.29 on the back of fresh fears of a no-deal Brexit. Normally Christmas is a time for giving, but with no economic data under the tree and Parliament on recess, Brexit concerns dominated sentiment towards the pound this week. Consequently, any hopes of clarity over the UK’s future relationship with the EU are on hold until MPs return to work a week on Monday. Despite this, the pair managed to find some festive cheer from somewhere yesterday, enabling it to edge back over 1.30.
US Jobless Claims Sink
Meanwhile, the US dollar was given a boost by Initial Jobless Claims figures on Thursday. The number of US citizens applying for unemployment benefits fell last week, signalling ongoing labour market strength. According to the Labor Department, initial claims for state unemployment benefits dropped by 13,000 to a seasonally adjusted 222,000 for the week ending 21 December. While overall mortgage application volume fell by 5.3% last week, they were still 128% higher than a year ago.
The UK’s economic data calendar eases back into action next week, with the release of mortgage approval figures on Monday. The New Year’s Day bank holiday on Wednesday means we must wait until Thursday for our first glimpse of influential data. This comes in the shape of December’s Markit Manufacturing PMI, which is forecast to remain below 50 for the eighth month in a row – the mark that separates expansion from contraction. This is swiftly followed by a slew of data on Friday, including Nationwide Housing Prices and Markit Construction PMI. Will the pound receive some much-needed economic support during such an uncertain time politically?
It’s business as usual in the US economic data calendar. The most significant figures include the Chicago Purchasing Managers’ Index on Monday, the Housing Price Index on Tuesday, Initial Jobless Claims on Thursday and the ISM Manufacturing PMI on Friday – perhaps the most influential of all the week’s data.
Developments in the US-China trade war earlier in the week means investors in the US dollar will be keeping an even closer eye on the ongoing saga between the two superpowers.
If you would like to learn more about factors influencing GBP/USD exchange rates for an upcoming currency transfer, feel free to contact myself, Jonathan Watson, using the form below.