The British pound has posted slight losses in the Wednesday session, continuing the downward movement we’ve seen for most of the week. In North American trade, GBP/USD is trading at 1.3384, down 0.44% on the day. On the release front, there are no British events on the schedule. In the US, ADP Nonfarm Employment Change slowed to 190 thousand, just above the forecast of 189 thousand. On Thursday, the US releases unemployment claims.
The ADP nonfarm employment report came in as expected, with a gain of 190 thousand. Still, this was a soft reading compared to the previous release, which showed a gain of 235 thousand. Investors are, of course, much more interested in the official nonfarm employment change release, which takes place on Friday. Again, the markets are expecting a soft landing, with a forecast of 200 thousand, down from 261 thousand in the October release. If nonfarm payrolls, one of the most important indicators, is weaker than expected, the US dollar could lose ground. The US will also release a wage growth report on Friday, with the markets expecting a gain of 0.3%.
The Brexit talks are back in the spotlight, but unsurprisingly, there remain plenty of bumps on the road. There had been hopes of a major announcement following a meeting between Prime Minister May and European Commission President Jean-Claude Juckner. However, these expectations were left on hold, as it became apparent that wide gaps remain on two key issues – Northern Ireland and the European Court of Justice. The European Union is willing to let EU rules apply to Northern Ireland, but the small DUP party, which is keeping the May government afloat, is against any steps which could be seen as moving the north and the republic of Ireland closer to unification. A solution that will satisfy the UK, the EU and the DUP over the Irish border remains elusive. Another thorny issue issue is whether the European Court of Justice will apply to European citizens in the UK after Brexit. While the EU is in favor of the court having authority over these citizens, many British lawmakers feel that such a move would undermines British sovereignty. The EU holds a key summit on December 12, and May, who is facing pressure at home over her handling of Brexit, is anxious to wrap up the non-trade issues and move on to trade negotiations as quickly as possible.
