The British pound has posted slight gains on Wednesday, continuing the upward trend which marked the Tuesday session. In North American trade, GBP/USD is trading at 1.3409, up 0.11% on the day. On the release front, there are no major events out of the U.S or Britain. On Thursday, the U.K releases Halifax HPI and the U.S publishes unemployment claims.
PMI reports, which provides a barometer of the health of the British economy, were positive in May. Last week, Manufacturing PMI rose to 54.4, above the estimate of 53.5 points. Construction PMI remained unchanged at 52.5, beating the estimate of 52.0 points. Services PMI also pointed upwards and hit a 3-month high. The indicator improved to 54.0, which beat the forecast of 52.9 points. All three indicators continue to point to expansion at a crucial time, as the U.K continues to grapple with Brexit, which has raised considerable apprehension about how the economy will fare when the U.K departs the European Union. With the services, construction and manufacturing sectors generally in good shape, sentiment towards the British pound should remain positive.
Canada is the host of the G-7 meetings this year, and finance ministers from six countries were united in their criticism of US Treasury Secretary Steve Mnuchin over a brewing trade war. Last week, the Trump administration imposed stiff tariffs on Canada, Mexico and the European Union. Prime Minister May expressed her disappointment with the U.S move in a conversation with President Trump. Canada will host the G-7 leaders on June 8, with the U.S tariffs sure to be high on the agenda. If the trade battle escalates, the result will be a lose-lose and thousands of British jobs could be at stake.
After weeks of speculation, the much-anticipated summit between the US President Trump and North Korean President Kim Jong-un is back on. The two leaders will meet on June 12 in Singapore, marking the first ever face-to-face meeting between leaders of the U.S and North Korea. Trump has tried to lower expectations, saying the sides are unlikely to reach an agreement on North Korea relinquishing its nuclear weapons. Still, the fact that the two leaders are meeting is a sign that significant progress is being made in the long-standing dispute between the two Koreas.
