The British pound has started the week with slight gains. In the North American session, GBP/USD is trading at 1.4058, up 0.32% on the day. On the release front, British markets are closed for the Easter holiday. In the US, ISM Manufacturing PMI dropped to 59.3, short of the estimate of 60.1 points. On Tuesday, the UK releases Manufacturing PMI, which is expected to soften to 54.8 points.
US indicators ended the week on a mixed note. Unemployment claims impressed, dropping to 215 thousand. This easily beat the estimate of 230 thousand. Consumer confidence also improved, as UoM Consumer Sentiment rose to 101.4, breaking past the 100-barrier for the first time since October. However, the indicator missed the estimate of 101.9 points. On Thursday, British GDP for the fourth quarter came in at 0.4% for a second straight quarter. As well, current account deficit was revised down sharply, coming in at GBP 18.4 billion. This was well below the estimate of GBP 24.0 billion.
Are we at the onset of a new global trading war? On Monday, China responded to recent US tariffs, imposing its own duties on a range of US goods, including frozen pork and wines. This move is bound to escalate tensions between the two economic giants, and has raised fears that a new global trade war could be underway. If the tit-for-tat measures continue, both the US and Chinese economies could suffer, which could lead to a global slowdown. Both sides are digging in tough and pointing fingers, and if tensions worsen, the volatility we’ve seen in the markets is likely to continue.