The British pound has posted losses in Tuesday trade. In the North American session, GBP/USD is trading at 1.3263, down 0.36% on the day. Earlier in the day, the pair touched a low of 1.32o4, its lowest level since November. On the release front, CB Consumer Confidence dipped to 128.0, missing the estimate of 128.0 points. The U.K will publish the BRC Shop Price Index. On Wednesday, the US publishes ADP nonfarm payrolls and Preliminary GDP.
The health of the British economy is raising alarm bells. Economic growth in the first quarter was weaker than expected, and the unseasonably snowy weather in March cannot explain away the economic slowdown. Inflation has dropped to 2.4%, and the Office for National Statistics had a bleak message for investors, noting that GDP was a negligible 0.1% in the first quarter. At its May meeting, the Bank of England has reduced its forecast for growth in 2018 to 1.4%, down from the 1.8% forecast in February. With the May government still mired in trying to sort out the endlessly complex divorce with the European Union, the British pound could continue to face headwinds in the second quarter. A rate hike would boost the currency, but the BoE may be reluctant to make a move – the bank had to backtrack from an expected rate increase earlier in May, and there is growing speculation that we will see a repeat (lack of) performance at the BoE’s August meeting, with the odds of an August rate hike at less than 50 percent.
One of the most talked about meetings in recent memory continues to dominate the headlines, but the proposed summit between President Trump and North Korean leader Kim Jong-un is yet to be finalized. The two leaders are scheduled to meet in Singapore on June 12, but curiously, neither side will confirm whether the meeting is on. Last week, Trump sent a letter to Kim, saying that Trump was canceling the much-anticipated meeting. However, the White House has since sent a team to Singapore and a senior North Korean official is on his way to Washington to meet with Secretary of State Mike Pompeo. These moves have fueled speculation that the summit will indeed take place.