The British pound is showing slight gains in the Thursday session. In North American trade, the pair is trading at 1.32246, up 0.15% on the day. In economic news, the BoE released its credit conditions survey. In the U.S, CPI edged down to 0.1%, shy of the forecast of 0.2%. Core CPI remained steady at 0.2%, matching the forecast. Unemployment claims dropped to 214 thousand, easily beating the estimate of 226 thousand. The indicator last posted a gain since November. On Friday, the U.S releases the UoM Consumer Sentiment report.
On Thursday, the British government released a white paper, which outlined its proposed new trade arrangements with EU when Britain leaves the club in March 2019. The proposal suggests that the UK and the EU will maintain the current agreements with regards to goods but not services. This would hurt the London financial district, which is already facing the loss of hundreds of financial jobs from London to the continent. European policymakers could give the plan a thumbs-down, arguing that the UK wants to cherry-pick, choosing to keep those aspects of trade with Europe that it likes, while rejecting other items such as free movement.
Prime Minister Theresa May is in a precarious position, as her government is in crisis following the stunning resignation of foreign secretary Boris Johnson on Monday. This comes on the heels of the resignation of Brexit Secretary David Davis on Sunday. Both senior ministers were protesting the “Chequers Agreement” in which the cabinet backed May’s stance in which the UK would maintain current customs arrangements for manufacturing and agricultural products after Brexit. Brexit hardliners such as Davis and Johnson have argued that such an arrangement would force Britain to harmonize much of its economy based on the dictates of Brussels. There is growing speculation that May will be replaced, and if the political crisis in Whitehall worsens, the pound could face some significant headwinds.
