The British has ticked higher in the Thursday session. In North American trade, GBP/USD is trading at 1.3131, up 0.11% on the day. On the release front, there are no British indicators. In the US, unemployment claims climbed to 239 thousand, missing the estimate of 232 thousand. On Friday, the UK releases Manufacturing Production and the US publishes Preliminary UoM Consumer Sentiment.
The Brexit talks are moving slowly, and one major sticking point is the size of Britain’s divorce bill. The European Union is demanding EUR 60 billion, while Britain has countered with an offer for EUR 20 billion. Britain wants to move on to discussing a trade deal with the continent, but the Europeans are insisting on more progress on the divorce bill as well as on other non-trade issues. If the sides still remain deadlocked in December without no deal in sight, hardliners on both sides could derail the talks completely, which would send shivers up the spines of investors and hurt the British pound. The Europeans are also wary about the ability of Theresa May to deliver the goods, given her continuing struggles at home. Two ministers have been forced to resign from May’s cabinet in recent weeks, and she hasn’t been able to present a coherent Brexit policy to the Europeans or to the voters at home.
BoE Governor Mark Carney hasn’t shied away from public statements on Brexit, much to the angst of many lawmakers. Carney weighed in again on Brexit in a television interview on the weekend. Carney expressed concern at the lack of uncertainty over a final deal with the European Union, saying that the economy "should really be booming, but it’s just growing." According to Carney, the BoE wants a scenario with a smooth transition out of the EU, with a trade deal that was somewhere in between full membership in a single market and a ‘no deal’ outcome. The BoE cut rates in August 2016, just after the Brexit vote. This reflected the Bank’s fear of a sharp downturn in the British economy, which did not occur. The BoE raised rates last week (for the first time since 2007), in what was widely viewed as a corrective measure to the August 2016 rate cut.
