The relatively disappointing week for the pound, despite better than expected UK Construction PMI release starting the week off, printing at 52.5 vs. 52.0. The GBP/USD came close to breaking 1.34 on the news. Alas, it couldn’t quite make it, and then duly broke down through various support levels, losing close to 100 points on Monday's session.
The war of words on US trade tariffs rumbled on too with Theresa May calling US tariffs “unjustified and deeply disappointing”. In other news, May is also set to delay the release of a Brexit white paper until after the EU summit at the end of June. Reports also revealed that the House of Commons will vote on the Brexit bill on 12th June, which gives them the opportunity to discuss 15 separate amendments made by the House of Lords. These headlines were hardly positive for the pound and GBP/USD struggled to recapture any gains for the better part of the week.
To close out the week, Brexit returned to weigh on the pound as UK Prime Minister, Theresa May managed to put together a proposal with regards to a UK/EU customs arrangement that was enough to stop Brexit Secretary David Davis from resigning and possibly cause a leadership contest to be launched. With the Irish border/customs situation continuing to be an unsolvable problem the PM held a meeting with Davis and others and finally communicated that the UK Government “expects” the current customs arrangement to last no longer than December 2021, when the transition period comes to an end. The fudged statement was enough to keep the wolf from the PM’s door and appease Brexit hardliners, for now.
Next week will be a busy week for the pound, with a myriad of releases including wage growth, inflation, and retail sales numbers from the UK.