GBP/USD has posted small losses on Wednesday, after recording gains in the past two sessions. Currently, the pair is trading at 1.3169, down 0.10% on the day. In the U.K, a CBI survey showed that retail sales volume dropped to 23, but still beat the estimate of 18 points. In the U.S, the spotlight is on the Federal Reserve, which is virtually certain to raise the benchmark rate to a range between 2.00% and 2.25%. On Thursday, the U.S will publish Final GDP and durable goods orders. The U.K. releases GfK consumer confidence.
All eyes are on the Federal Reserve, which is widely expected to raise rates by 25 basis points at the conclusion of its policy meeting on Wednesday. What will be the tone of the rate statement? The U.S economy is in excellent shape, with GDP for Q2 expected at 4.2%, and unemployment hovering below 4 percent. However, the escalating global trade war has raised concerns that it could cool down global economic growth and hurt the U.S economy as well. Still, another rate hike in December is pegged at 78% according to the CME, and some experts are predicting up to four rate hikes in 2019.
With EU leaders rebuffing the latest proposals from British Prime Minister May on Brexit, negotiations over the UK leaving the EU remain deadlocked. Both sides are making preparations in the event that no deal is reached by the March deadline. European leaders reacted with alarm on Wednesday to a leaked document that Labor leader Jeremy Corbyn had instructed Labor MPs to vote against any deal May brings home, in order to trigger new elections. Corbyn has declared that Labor will vote against any deal that does not provide the same benefits as membership in the single market, and Labor could join up with rebel Conservative MKs to torpedo a deal. Growing uncertainty as to whether a deal can be reached by March has alarmed the business sector and could weigh on the British pound.
