Sterling is trading slightly lower today following yesterday’s rally, although it is still holding above the breakthrough level of $1.30 struck yesterday afternoon, signalling that markets are expecting Britain to avoid a chaotic exit from the European Union.
With the US government’s partial shutdown continuing into its 34th day, investor sentiment in the dollar remains weak.
US-China trade tensions have also been in focus, as the US confirms that it plans to pursue the extradition of Huawei CFO, Meng Wanzhou, with the hearing expected to begin in February.
In remarks that have been deemed as inappropriate political meddling, Canada’s ambassador to China, John McCallum, stated that Miss Meng has said the US could seek to make a deal with China in which they would no longer seek her extradition – something Mr Trump said in December he would consider, stating: “[I will] Intervene if I thought it was necessary.”
Later this afternoon the US will release the latest initial and continuing jobless claims figures, with the initial jobless claims forecast to increase while the continuing expected to decrease.
The government shutdown will likely affect the US unemployment figures, as a large number of federal employees have been furloughed, potentially lowering US dollar sentiment.
Back in the UK, after comments made yesterday by the former chancellor, George Osborne, it seems likely that any further indication of there being a delay to the UK leaving the EU will push up the pound further.
Brexit is likely to remain the main catalyst for fluctuations in pound exchange rates today and tomorrow as there is a lack of UK data releases for the rest of this week’s session.
Theresa May is meeting a number of union leaders today, many of whom back delaying Brexit, although whether they have any influence over the PM and cause further rises in Sterling remains to be seen.