- Brexit Secretary reiterates no transition period extension will be requested
- US-Sino tensions rise as Hong Kong could lose special trade status
- US GDP, durable goods & jobless claims in focus
- AT 07:15 UTC, GBP/USD is trading +0.1% at US$1.2269 >> Real time exchange rate
The Pound (GBP) is attempting to push higher versus the US Dollar on Thursday, clawing back some losses from the previous session. Investors are licking their wounds after the Pound dropped 0.66% on Wednesday to settle at US$1.2250, slightly up from the session low of US$1.2205.
At 07:15 UTC, GBP/USD is trading +0.1% at US$1.2269 following Brexit disappointment and as the US Dollar stands its ground on heightened US – Sino tensions.
The Pound slumped in the previous session and the rebound looks lacklustre after UK Brexit Secretary David Frost reiterated that the UK would not be seeking to extend the Brexit transition period, which ends on 31st December.
There had been growing optimism among investors that the government could extend the deadline given the delays that have occurred to the timeline, owing to coronavirus.
With no extension, the pressure is high for the UK and the EU to reach a trade deal in the coming months or Britain will face a cliff edge, no deal Brexit. This will almost certainly be an economic hit at the time that the UK economy is still trying to pick itself up from the coronavirus impact to the economy.
On a positive note, British employers turned a little less pessimistic about hiring and investment this month, according to a leading industry body. Recruitment & Employment Confederation Business’s confidence measure remained in negative territory but increased from -21 in April to -10 in May, as the government started to ease lockdown measures.
The safe haven US Dollar remains underpinned by escalating tension with China over Hong Kong. Last night, Washington took steps towards potentially removing the city’s special trade status. US Secretary of State Mike Pompeo said that the US no longer views Hong Kong as autonomous from mainland China. This has been the most serious response from the Trump administration over China’s crackdown on civil liberties in the financial hub.
US Dollar investors also have a full economic calendar to contend with. Attracting the most attention with be US Q1 GDP, Durable goods and jobless claims. However, expectations are bleak.
GDP is expected to confirm -4.8% annualized contraction, April durable goods are expected to fall by a record -19.1% whilst initial jobless claims are expected to remain stubbornly high.
