The British pound has posted gains in the Monday session. In North American trade, GBP/USD is trading at 1.3239, up 0.18% on the day. On the release front, there are no British indicators on the schedule. In the US, the sole event is CB Leading Index. The indicator gained 1.2%, above the forecast of 0.6%. On Tuesday, the UK releases Public Sector Net Borrowing and the BoE Inflation Report Hearings. The US will publish Existing Home Sales. As well, US Federal Reserve Chair Janet Yellen will speak at an event in New York City.
There was good news from US construction numbers on Friday. Building Permits for single-family homes jumped to 1.30 million, above the estimate of 1.25 million. The annualized pace of 839,000 building permits in October was the fastest since September 2007. Housing Start also sparkled, accelerating to 1.29 million, compared to an estimate of 1.19 million. The catalyst for the strong numbers were hurricanes Harvey and Irma, which caused massive damage in the southern part of the US. With rebuilding efforts well underway, construction numbers should remain strong in the fourth quarter.
One of the main sticking points in the Brexit negotiations is the size of Britain’s divorce bill. The European Union has demanded EUR 60 billion, while Britain has made an offer of EUR 20 billion. Prime Minister May apparently wants to compromise at EUR 40 billion, but senior ministers Boris Johnson and Michael Gove are reluctant to pay more without a clearer idea of what form a new trade relationship with Europe will take. The divisions within May’s cabinet have only weakened May’s hand. 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. With Britain scheduled to leave the EU in March 2019, there is pressure on both sides to begin trade talks before the end of 2018.
