John Hawksworth, the Chief Economist at the professional services network PwC, said that today’s figure provided “no change to the big picture of a slowing [British] economy.” Analysts at Reuters were also downbeat: “Britain’s economy has slowed since the Brexit referendum, and now faces increased headwinds from trade tensions between the United States and China and a slowdown in Europe.” The UK economic data took a backseat as the Conservative Party conference entered its second session, with investors hoping for insights into the British government’s progress in securing a Brexit deal.
Prime Minister Boris Johnson offered a Sterling confidence during an interview for BBC’s Andrew Marr Show, by claiming there was a “good chance” of getting a deal ahead of the October 31 Brexit deadline.
Meanwhile, rumours that Washington intends to place new limits on Chinese investments in the US prevented the US dollar from making any gains on Sterling, despite its status as a safe-haven currency and a subdued pound.
Comments by Charles Evans, the President of the Federal Reserve Bank of Chicago, exacerbated US dollar weakness when he highlighted the “increasing fragility” of the US economy.
The “greenback” could edge higher later today if September’s Chicago purchasing managers’ index shows any signs of improvement.
The GBP/USD exchange rate could sink if the Conservative Government fails to present a workable UK-EU Brexit deal ahead of the October deadline.