The British pound is lower against the US dollar on Thursday afternoon with Sterling digesting strong gains so far this week on the reversal of expectations for lower UK interest rates. The dollar is seeing some modest haven flows as global equity markets turned lower on renewed concerns about the coronavirus in Wuhang China.
GBP/USD was lower by 15 pips (-0.12%) at 1.3119 with a daily price range of 1.313 to 1.315 as of 12pm GMT, as the currency pair pulled back from 2-week highs but held onto the 1.31 round number.
The pound was little-moved after the UK House of Lords approved Boris Johnsons’ Brexit bill last night. It is huge news for the United Kingdom that Brexit will now actually happen after months of delay with many members of parliament pushing for a second referendum. But the idea that Brexit will indeed happen on January 31st has been understood since the election results first came in and has long since been priced in by currency markets. Johnson won a landslide election victory in December by promising to implement the result of the 2016 referendum.
The next task of course is securing a trade deal with the European Union and other important trading partners like the United States. In a videoed ‘Peoples PMQs’ Prime Minister Boris Johnson said that he was confident a deal could be achieved with the EU by year-end.
With the Bank of England decision coming next week, attention is turning to the next set of economic data for the UK on Friday. Manufacturing and Service sector PMIs will be released at 9.30am GMT and economists are expecting an improvement. The decision appears to be on a knife-edge with the Bank of England seemingly undecided on whether to go step ahead of Brexit-related uncertainty and falling inflation with a rate cut or take heart from the highest employment rate on record and keep rates steady.
Later today, jobless claims will be released in the United States. Continuing jobless claims through January 10 are expected to be 1.746M while initial jobless claims for the week through January 17 are forecast to be 215k, up from 204k the week prior.