The British pound is slightly higher in the Thursday session. In North American trade, GBP/USD is trading at 1.3199, up 0.21% on the day. On the release front, British Retail Sales gained 0.3%, beating the forecast of 0.1%. US key indicators were a disappointment. Unemployment claims jumped to 249 thousand, well above the estimate of 235 thousand. The Philly Fed Manufacturing Index slipped to 22.7 points, short of the forecast of 24.5 points. On Friday, the focus will be on housing data, with the release of Housing Starts and Building Permits.
There were no surprises from British employment numbers on Wednesday. Wage growth remained steady at 2.2%, but this is well below inflation, which means that the consumer is seeing her purchasing power drop, and weaker consumer spending could hurt the economy. The BoE raised interest rates to 0.50% earlier this week, but this move has yet to push inflation lower. Unemployment is at historical lows, and economists expect the robust labor market to produce higher wages. However, the current situation mirrors what is happening in the US, where an employment market running at capacity has not translated into higher wages for workers.
The Brexit talks are at an impasse, with large gaps between the sides, such as the size of Britain’s divorce bill. Britain wants to talk with Europe about a trade deal, but the Europeans are demanding progress on a number of other matters, such as the size of Britain’s divorce bill. The British government remains divided on Brexit policy, with senior ministers quarreling over how to handle Britain’s departure from the EU, which is scheduled for March, 2019. May hasn’t been able present a coherent Brexit policy to the Europeans or to the voters at home, raising doubts as to whether she can deliver the goods on Brexit. Earlier in the week, Brexit Secretary David Davis said he would introduce legislation that would allow MPs to vote on the final Brexit deal, but lawmakers would not be able to amend the legislation.
