07/10/16 - Sterling Continues Slide

GBP

The pound dropped a further 1.3% yesterday after  discussions about a hard Brexit are causing concern across Britain’s financial markets, with the pound’s drop to a 31-year low against the dollar in focus. 

At Conservative Party’s annual conference this week, leaving the European Union remained a hot topic. Prime Minister Theresa May appears to be moving closer to a so-called hard Brexit that will restrict access to the EU’s single market so that the government can control immigration. The Pound has tumbled more than 2.5 percent since May’s speech on Sunday, weakening further as she was said to take the view that financial services would get no special favors in EU exit talks.

The pound has come under renewed pressure as fears grow that Britain's divorce from the EU will be messier and costlier for the economy than expected. March 2017 is now set as the deadline for triggering ‘divorce’ proceedings, and the market is taking strain. The pound has already dropped 16 percent since the UK referendum, and is currently at the lowest level since 1985. 
 

USD

The number of Americans filing for unemployment benefits unexpectedly fell last week, close to a 43-year low. This afternoon sees the release of the US unemployment figures, and the unemployment rate is expected to hold steady at 4.9 percent. Jobs growth has been slowing, but is still well above the threshold needed to absorb new entrants into the labour market. The U.S. Federal Reserve has said it is inclined to raise rates by the end of the year should the labour market and inflation continue to show signs of strengthening.

Key Announcements

09.30 – GBP : Manufacturing Production (Aug), forecast higher at 0.4 from -0.9%

13:30- USD: US Non-Farm Unemployment  forecast expected at  171K from 151K

13:30- USD: US Unemployment expected to remain unchanged at 4.9%