The pound is holding steady in early trade on Thursday after plummeting 0.89% in the previous session.
The GBP/USD exchange rate dived to a nadir of US$1.2896 before closing the session a few points higher at US$1.29.
GBP/USD: Pound Consolidates Losses
Brexit deal nerves weighed on the value of the pound in the previous session. Today the pound is consolidating those losses. Whilst the EU set out its mandate for EUR – UK post Brexit trade talks earlier in the week, today it is the turn of the UK. The white paper is expected to show that the UK looks to take back full control of its rights and rules including over areas such as the environment, employment law and state aid. This isn’t necessarily compatible with the EU’s goal of a level playing field between the two sides.
Other points of potential contention include fishing and the return of unlawfully taken cultural objects. Ministers are expected to set out demands for a Canadian style agreement; one that the EU have already said is not plausible.
The latest drawing up of red lines and exchanges between the EU and the UK have shed light on the distance between the goal posts. Investors are growing increasing uncertain as to whether the two sides will agree a trade deal in such a short period of time. P
Will US Durable Goods Drag On Dollar?
The dollar rebounded on Wednesday as investors scaled back expectations that the Fed would slash interest rates in response to the rapid spread of coronavirus outside of China. Earlier in the week, as coronavirus had quickly spread in the Middle East and Italy investors no longer considered the US economy as immune, instead raising bets that the Fed would be forced to ease policy.
Today there are a number of high impacting US data releases which could attract investors attention. US durable goods, US GDP and core personal consumer expenditure will provide investors further insight as to the health of the US economy. Whilst GDP is expected to confirm annual growth of 2.1%, durable goods put pressure on the greenback. Analysts are predicting a -1.5% month on month decline in January, following a 2.4% increase in December.