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Brexit holding up UK-US trade deal?

Brexit holding up UK-US trade deal?

Trading was less volatile yesterday than at the start of the week. The dollar held slightly firmer after Fed Chair Jerome Powell reiterated his view that US inflation can no longer be described as transitory, and that he is open to the idea of a quicker paced tapering of QE (money printing).

UK house prices increased by 0.9% for November with the annual increase at 10.0% from 9.9% previously according to Nationwide. The UK manufacturing PMI index (manufacturing prices) was revised marginally lower to 58.1 as supply-side issues continue.

The pound benefitted from stronger global risk conditions, although there was little evidence of momentum with underlying caution still a key element. Markets remained uneasy over developments surrounding the Omicron variant, especially given the importance of the UK as a travel hub and there were also further doubts whether the Bank of England would push ahead with an interest rate hike in December. From highs at 1.3350, Sterling retreated to just below 1.3300 as the dollar regained ground while the euro found support below 1.1765. 

This morning Sterling opens below 1.3300 to the dollar with reports that the US was delaying a trade deal with the UK due to Brexit concerns also hampering sentiment. The next major economic data will be tomorrow’s US jobs report.

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