The dollar again weakened against the pound as GBP strengthened with a no-deal Brexit looking increasingly likely. GBP/USD hit 1.328 this morning.
However, warnings from US trade representative Robert Lighthizer on the progress of US-China trade deals did see the dollar benefit slightly. Testifying to Congress, Lighthizer acknowledged that whilst progress had been made, ‘it is too early to predict the outcome’ of negotiations between Washington and Beijing, and that ‘significant structural changes’ were needed to the Chinese economy. Despite this, he later revealed that the US is abandoning its threat to raise tariffs to 25% on $200 billion of Chinese goods – signalling that a truce may, in fact, be close.
Meanwhile in Vietnam, Donald Trump and Kim Jong-un failed to reach an agreement on denuclearisation. In a news conference, Trump stated that, ‘They wanted sanctions lifted in their entirety and we couldn’t do that’. According to Trump, Kim Jong-un had agreed to the dismantling of the testing facility central to North Korea’s nuclear programme, but only on the condition that all sanctions were lifted in exchange. The US was not prepared to lift these sanctions, and so an agreement was not met.
Later today, the delayed GDP figures are released. It will be interesting to find out how America’s economy fared in the final quarter of 2018, and, if outside of expectations, we could see important movement in the rates.
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