The British pound has edged higher in the Tuesday session, erasing the losses seen on Monday. In the North American session, the pair is trading at 1.3140, up 0.30% on the day. On the release front, British CBI Industrial Order Expectations dipped to 11 points, but still beat the estimate of 8 points. In the U.S, the Richmond Manufacturing Index remained pegged at 20 points, above the estimate of 18 points. On Wednesday, the UK releases CBI Realized Sales, while in the U.S, New Home Sales is forecast to drop sharply to 669 thousand.
With U.S trade tariffs on EU products threatening to hurt British exports and the manufacturing sector, the markets are keeping a close eye on UK manufacturing indicators. Manufacturers 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.”
Relations between the U.S and EU have nosedived in recent weeks, after months of tit-for-tat tariffs and harsh rhetoric. The U.S slapped tariffs on EU steel and aluminum back in June, and the EU has since retaliated with tariffs on a range of U.S products. President Trump has not shied away from harsh criticism about the EU, and a recent NATO summit exposed the frosty relations between Trump and EU leaders. Still, there could be better news ahead, as EU President Jean-Claude Juckner meets with President Trump on Wednesday. On Friday, Trump attacked the EU and China for manipulating their currencies and keeping interest rates lower. This has raised concerns that the current global trade tensions could be followed by a currency war. Growing concerns over the dangers of the ongoing trade war were summed up in the final communiqué from the G-20 meeting in Argentina over the weekend, which noted that “heightened trade and geopolitical tensions pose an increased risk to global growth”.
