The British pound continues to post gains in the Thursday session. In North American trade, GBP/USD is trading at 1.3531, up 0.90% on the day. On the release front, British Nationwide HPI came in at 0.1%, shy of the estimate of 0.2%. In the US, unemployment claims edged lower to 238 thousand, below the estimate of 241 thousand. Personal Spending dropped to 0.3%, marking a 4-month low. Still, this beat the estimate of 0.2%. On Friday, manufacturing numbers will be in focus, as the US and UK release manufacturing PMIs.
Britain wants to kick-start the languishing Brexit talks and talk trade with the Europeans. This may have been the catalyst for Prime Minister May to sweeten the pot and going a long way to meeting the EU demands on Britain’s divorce bill. The Europeans have demanded EUR 60 billion, while the UK had countered with EUR 20 billion. However, the UK has upped its offer significantly, and the final amount could be as high as EUR 50-60 billion. May is hoping that her improved offer will placate Brussels and pave the way for trade talks to begin in December. Another thorny issue on the Brexit plate is the status of the border between Northern Ireland and Ireland. Britain has ruled out having the north remain in a customs union with the EU after Brexit, but Ireland is insisting that there not be a hard border, and wants written guarantees from London as to the nature of the border after Brexit.
The US economy continues to perform well, and there was more good news on Wednesday, as Preliminary GDP for the third quarter posted a sharp gain of 3.3%. This was higher than the initial estimate of 3.0% and marked the fastest growth rate since Q3 of 2014. This was particularly impressive, as the southern US was battered by major hurricanes which caused significant economic damage. Consumer confidence levels are sky-high, but consumer consumption softened in the third quarter. However, business spending improved in the third quarter. Federal Reserve Chair Janet Yellen sounded upbeat about the economy, saying that the expansion was broad-based, across sectors of the economy.
