The British pound has posted strong gains in the Wednesday session. In North American trade, GBP/USD is trading at 1.4207, up 1.48% on the day. In economic news, the UK released key employment numbers. Wage growth remained unchanged at 2.5%, matching the forecast. Jobless claims climbed to 8.6 thousand, well above 2.3 thousand. There was no change to the unemployment rate, which held at 4.3%. This matched the estimate. In the US, Existing Home Sales disappointed, slowing to 5.57 million. This missed the forecast of 5.72 million. On Thursday, the US releases unemployment claims and New Home Sales.
The pound continues to impress, and is currently at its highest level since June 2016. GBP/USD has climbed 5.3% in January, as the US dollar has been battered by its major rivals. On Tuesday, the pair pushed above the symbolic 1.40 level, and with sentiment waning over the dollar, the pound rally could continue this week. The markets are keeping a close eye on Preliminary GDP for Q4, which will be released on Friday.
The US government shutdown turned out to be little more than a nuisance, with only one working day lost. On Monday, the Senate voted 266-150 to extend government funding until February 8. This stopgap measure will enable the government to provide services during that time, but the lawmakers will need to hammer out a longer-term agreement, as these short extensions are just band aid solutions. The Democrats held up a funding bill last week, in order to force the Republicans to the table over illegal immigration. The Republicans have promised to hold a vote on this issue, but many Democratic lawmakers remain skeptical that President Trump and the Republicans will deal in good faith over immigration.
