Larry Kudlow, the White House’s Chief Economic Advisor, commented: “We’re getting close [to a US-China trade deal]. The mood music is pretty good, and that has not always been so in these things… [T]here has been very good progress and the talks have been very constructive.” Today also saw the release of October’s US retail sales figure, which beat forecasts and rose from -0.3 percent to 0.3 percent.
The evidence of an improvement in consumer demand supports the case in favour of the Federal Reserve leaving interest rates on hold for the time being.
Meanwhile, the pound remained subdued before the weekend, with investors’ confidence in a Conservative victory in the December 12 general election being offset by wider concerns for the British economy post-Brexit.
Neil Mellor, a Senior Currency Strategist at BNY Mellon, commented: “My concern is – and this is something possibly the market has thought about – that we’ve got preoccupied with the election but there is still a lot of uncertainty post-election.”
However, Ulrich Leuchtmann, the Head of Commodity Research for Commerzbank, said: “At present [the pound] benefits from anything that lowers Labour’s chances of winning the election.”
We could see the pound begin to fall against the “greenback” if Washington-Beijing relations continue to show signs of improving, as this would reduce concerns for the UK’s economic outlook.