GBP/USD actually finished unchanged last week having been as low as 1.3995 on Tuesday and as high as 1.4275 on Thursday. After Friday’s US employment report, GBP/USD fell a full cent to end the week roughly where it had begun at 1.4125 and it is only modestly below that level after a fairly quiet session this Monday morning in Asia.
The weekend Press in the UK was full of rumours of a leadership challenge and pressure on the PM to clarify her own intentions. Finally, on Sunday evening, Downing Street ‘sources’ gave an on the record but anonymous statement which said, “It is not our policy to be in the customs union. It is not our policy to be in a customs union.” The statement went further than Prime Minister May who, on Friday, refused to rule out involvement in a customs union when questioned during her visit to China. She had simply told journalists then, “What I want to do is ensure that we have got the best possible trade arrangements with China and with other countries around the world.”
For the week ahead, there’s a Bank of England MPC meeting on Thursday. In his appearance before a House of Lords Select Committee last Thursday, BoE Governor Carney hinted that the Bank is preparing to upgrade the forecasts in its Inflation Report. “I would expect that in 2019 we will see a pick-up in this economy all things being equal – strong global growth, greater certainty... A disorderly Brexit, not a likely scenario at all, is less likely than at the time we did the assessment in the fall.” Whether the Bank’s relative optimism will outweigh the political negatives, however, remains to be seen. With the UK service sector PMI due at 9.30am local time, the Pound opens this morning at USD1.4120, GBP/AUD1.7790 and GBP/NZD1.9325.