The British pound is unchanged in the Wednesday session. In the North American session, the pair is trading at 1.3141, down 0.02% on the day. On the release front, British CBI Realized Sales dropped to 20, but still beat the estimate of 16 points. In the U.S, New Home Sales dropped sharply to 631 thousand, well off the estimate of 669 thousand.
Retail sales growth remained strong in July at 20 points, although it was weaker than the sizzling release of 32 points in June, which was largely due to the unseasonable heat wave. However, the indicator is expected to drop in August. On Tuesday, manufacturer orders showed strong growth for a second straight month, with a reading of 11 points. The CBI Manufacturing Council welcomed the strong manufacturing data, but cautioned that “rising trade tensions and ongoing uncertainty over our future trade and customs arrangements are clearly taking their toll on manufacturers’ confidence and investment.” With U.S trade tariffs on EU products threatening to hurt British exports and the manufacturing sector, the markets are keeping a nervous eye on UK manufacturing indicators.
Tit-for-tat tariffs between the U.S and the EU has seen the trade relationship between them reach a low point. More tariffs could be coming, as the EU has vowed to impose $20 billion in tariffs on U.S products if the Trump administration slaps $50 billion on European goods. Will the nasty trade war worsen or will the sides pull back? There could be important developments on Wednesday, as an EU delegation led by European Commission President John-Claude Juckner meets with President Trump at the White House on Wednesday. Although the UK has one foot out the door, tariffs against the EU are having a negative impact on the British economy, and an improvement in relations between the US and the EU could boost the British pound.
