The Pound to US Dollar (GBP/USD) exchange rate slipped back below the 1.35 barrier on Friday; GBP/USD broke through the 1.35 key technical level for the first time in two months this week as markets watched Brexit progress unfold yesterday. The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate also attained gains earlier in the week only to relinquish them on Friday. As it seemed Theresa May was close to a divorce deal, the Pound had been able to strengthen against other currency majors. However, the end of the week saw the British Pound to US Dollar (GBP/USD) exchange rate stumble as Ireland raised the threat that it could stand in the way of a deal with objections to the EU’s Irish border demands.
In Friday’s session, Markit’s UK Manufacturing Purchasing Managers’ Index (PMI) increased above forecasts. The November figure came in at 58.2 – the strongest in four years, up from a positively revised 56.6 in October.
IHS Markit Director Rob Dobson commented:
‘UK manufacturing shifted up a gear in November, with growth of output, new orders, and employment all gathering pace. On its current course, manufacturing production is rising at a quarterly rate approaching 2.0%, providing a real boost to the pace of broader economic expansion.’
In other news, the Royal Bank of Scotland (RBS) announced that it will be axing 680 jobs as it closes 259 branches in a bid to increase online and mobile banking services. The Unite union has suggested that actually up to 1,000 roles were at risk.
Unite national officer Rob MacGregor commented:
‘The Royal Bank of Scotland has decided to decimate its bank branch network. Now serious questions need to be asked about whether these closures mark the end of branch network banking. This announcement will forever change the face of banking in this country resulting in over a thousand staff losing their jobs and hundreds of high streets without any banking facilities.’
Meanwhile, across the pond, there are some highly influential US and Canadian ecostats due out in Friday’s session. The Canadian quarterly Gross Domestic Product (GDP) Q3 number will be out this afternoon, along with the Canadian Unemployment Rate and Net Change in Employment numbers. Later in the session, the RBC Canadian Manufacturing PMI will be released. In the US, the ISM Manufacturing and ISM Employment numbers will hit the market and could have a significant impact on the way the USD exchange rate trades.
In US politics, Republican Senator John McCain stated that he would back the tax overhaul bill, a relief to many hoping to push the bill through as whether he would support the decision or not, was unpredictable. The vote on whether to pass the tax bill will be taken today, a slight delay from the Thursday forecast. In other politics, President Donald Trump could be looking to replace Rex Tillerson with CIA Director Mike Pompeo. The Tillerson/Trump relationship has soured in recent months when they’ve hit loggerheads a number of times, giving Trump motive to create a political shakeup.
This week has seen the Canadian Dollar exchange rate slip to a four-week low versus the US Dollar (CAD/USD) at 77.51, dropping by around 1.4% in the past week. The Loonie exchange rate has tumbled lower on account of a widening in the Canadian trade deficit, and momentum surrounding Trump’s tax reform. However, Friday saw the CAD/USD currency pair trend higher as the Organisation of Petroleum Exporting Countries (OPEC) meeting yielded a positive result. The organisation decided to extend their output cuts until the end of 2018, meaning oil prices could rise.
The Pound to US Dollar (GBP/USD) exchange rate is trending at 1.3479. The Pound to Canadian Dollar (GBP/CAD) exchange rate is in the region of 1.7343.