GBP picks up again

GBP picks up again

There was a wave of data released this morning in the UK, starting with the GDP figures: the UK economy grew by 0.3 per cent in the three months to November, down from 0.4 per cent in the three months to October and the weakest in six months. On a monthly basis, GDP rose by 0.2 per cent in November, better than October’s reading of 0.1 per cent but according to various economists, the UK growth is likely to remain weak in the coming months. Looking closer into the figures, it’s clear that the service sector has performed better than expected in the three months to November while the manufacturing sector was clearly the weak link, having now fallen for the fifth consecutive month, the first time this has happened since the financial crisis. PM May is still widely-expected to lose the crunch vote on her deal next Tuesday but the pound has been rising in the last hour on Brexit delay speculation: according to a report in the Evening Standard, unnamed “cabinet ministers” said a Brexit date of 29 March was looking increasingly unachievable. The UK government however contested it and reassured that Brexit legislation will be passed in time and that its policy is not to extend article 50. Nevertheless, the pound rose by a cent against the USD, to a high of 1.2850.
In the US, about 800,000 federal workers will miss their paychecks tomorrow, which will be Day 21 of the shutdown, as President Trump continues to negotiate and campaign for a border wall. Meanwhile, the greenback has weakened further, as the Federal Reserve Bank chair Jerome Powell reiterated yesterday that the US central bank can be patient before adjusting interest rates again: “We’re in a place where we can be patient and flexible and wait and see what does evolve, and I think for the meantime we’re waiting and watching”. Analysts will be watching closely the US trade balance and inflation data, expected this afternoon. The week ahead should be full of surprises with the “meaningful vote” on the Brexit deal in the House of Commons taking place on the same day as ECB president Mario Draghi presenting the European Central Bank’s annual report to EU lawmakers in Strasbourg.

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