The British pound has posted slight losses in the Monday session. In North American trade, the pair is trading at 1.3247, down 0.28% on the day. On the release front, it’s a quiet start to the week, with no major events on the schedule. On Tuesday, the UK releases Manufacturing Production and trade balance.
The British government has plunged into crisis on Monday, following the stunning resignation of foreign secretary Boris Johnson. On Sunday, Brexit Secretary David Davis handed in his resignation, saying that the “Chequers Agreement” which the cabinet backed on Friday gave away too much to the European Union. Under that agreement, Prime Minister May presented concessions to the EU, with the UK agreeing to maintain current customs arrangement for manufacturing and agricultural products after Brexit. However, Brexit hardliners such as Davis and Johnson are against the agreement, which they argue would force Britain to harmonize many of its regulations with Brussels. May is clearly in trouble, and this could mean turbulence for the British pound.
U.S employment data was a mix on Friday, as job growth remained above the 200-thousand level, but wage growth faltered. Nonfarm payrolls dropped to 213 thousand, but this beat the estimate of 195 thousand. Average Hourly Earnings edged lower to 0.2%, shy of the estimate of 0.3%. There was a surprise as the unemployment rate climbed to 4.0%, above the forecast of 3.8%. The data demonstrates that the U.S labor market remains strong, and the economy continues to perform well. The markets remain bullish on U.S growth, despite uncertainty in Europe and elsewhere, as well as the growing threat of an all-out trade war between the U.S and China.
