- Pound (GBP) rebounded late on Wednesday, holds above $1.30
- Brexit in focus after internal markets bill undercuts Brexit divorce agreement
- US Dollar (USD) is extending weakness from Wednesday
- US initial jobless clams to show 846,000 new claims
The Pound US Dollar (GBP/USD) exchange rate is treading water after rebounding in the previous session. The pair slipped to a six-week low of US$1.2884, before rebounding to settle +0.1% at US$1.3000. Today at 06:15 UTC, GBP/USD trades flat around US$1.30.
Brexit remains the central focus for the Pound after the government sent Brexit trade talks into crisis with its Internal markets bill which, it acknowledged could be breaking international law by undermining parts of the Brexit withdrawal agreement. Despite the EU voicing concern, Chief negotiator Michel Barnier is still in London for trade talks, which is offering some support to the Pound.
In addition to Brexit, rising coronavirus cases in the UK are dragging on demand for sterling. The Prime Minister Boris Johnson announced that gathering of up to 6 people are allowed as cases rise to 2659 new daily infections.
Separately house prices continued to surge post lockdown. In August prices jumped to a 4 year high. According to the Institute of Chartered Surveyors (RICS) prices soared on their index +44 in August from +13 in July. This was the highest level since February 2016.
The US Dollar is slipping versus its major peers. The US Dollar slid from a four week high versus a basket of currencies in the previous session after a report said that the ECB were confident in the outlook for the blocs recovery. The comments lifted the Euro, dragging on the US Dollar.
US jobless claims will be in focus. Investors will be keen to see whether the recovery in the US labour market continues to play out n the data. Last week claims fell below 1 million for the second time since the pandemic started, increasing by 881,000. Analysts are expecting 846,000 Americans to have signed up for unemployment benefits last week which would represent a continued improvement, albeit a slow improvement.
