GBP/USD has posted strong losses in the Monday session. In North American trade, the pair is trading at 1.2975, down 0.72% on the day. On the release front, there are no British or U.S events. On Tuesday, the U.K releases CBI Industrial Order Expectations and the U.S publishes the Richmond Manufacturing Index.
Brexit negotiations appear deadlocked, although Prime Minister May sounded surprisingly upbeat about the status of the talks, stating in parliament that 95% of the issues have been resolved, with the status Irish border remaining in dispute. May continues to face difficulties with a restless cabinet, as some ministers are uneasy about her remarks last week that she was open to extending the transition period. May could face a leadership challenge, and a huge rally in London calling for a second referendum underscores the volatile political climate in Britain ahead of Brexit Day in just five months time. The uncertainty surrounding Brexit continues to weigh on the pound, which dropped below the symbolic 1.30 line on Monday, for the first time since the October.
Relations between the U.S and China are frosty, with the markets nervous that the trade war could worsen. The U.S Treasury Department released its semi-annual report on foreign exchange rates, and there was some relief in the markets as the report did not name China as a currency manipulator. Still, the report said that the U.S was “deeply disappointed’ with that China refuses to disclose the extent of its foreign currency intervention. The Chinese yuan has slipped some 9 percent since April, and U.S officials are concerned that China has deliberately weakened the currency in order to counter U.S tariffs on Chinese goods, and will continue to monitor China’s currency practices.
