GBP/USD has posted slight gains in the Monday session. In North American trade, the pair is trading at 1.2829, up 0.10% on the day. It’s a quiet start to the week, with no major releases. On Tuesday, the U.K. releases CBI Realized Sales and the BRC Shop Price Index. The U.S. will release CB Consumer Confidence, which is forecast to dip to 136.2 points.
On Sunday, 27 European Union leaders gathered in Brussels and gave their approval to the Brexit withdrawal agreement, as well as a political declaration on economic relations between Britain and the EU after Brexit. At the meeting, EU leaders took pains to warn British parliamentarians that the EU will not agree to reopen the agreement. Dutch Prime Minister summed up the mood in Brussels, saying “there is no Plan B”. The EU has signaled that the deal signed on Sunday is “take it or leave it” – if the U.K. doesn’t sign on, the result will be a hard Brexit which could be catastrophic for the British economy. Prime Minister May joined the summit on Sunday and again urged British lawmakers to approve the deal, saying it met most of Britain’s demands. Still, May will have an uphill battle pushing the deal through parliament, with the Labor party and many Conservative MPs set to vote against the deal.
The markets have grown accustomed to strong economic numbers from the U.S, but quarterly GDP readings have been falling throughout 2018. This has led to speculation that the Federal Reserve could ease up on its interest rate hikes next year. Only a few weeks ago, there were expectations that the Fed might raise rates each quarter in 2019, but the mood has become more cautious. The U.S.-China trade war has caused a slowdown both economies, and President Trump’s $1.5 trillion tax cut has boosted the economy, but its effect on the economy is fading. A slowdown in the U.S economy would further exacerbate difficult conditions for the global economy, which is already feeling the effects of the global trade war.