GBP/USD has posted slight gains on Wednesday, recovering some of the losses seen on Tuesday. In the North American session, the pair is trading at 1.2991, up 0.09% on the day. On the release front, British Services PMI dropped to 53.9, close to the estimate of 54.0 points. In the U.S, ADP nonfarm payrolls jumped 230 thousand, crushing the estimate of 185 thousand. This marked the strongest increase in private sector jobs since March. There was more positive news from the services sector, as ISM Non-Manufacturing PMI climbed to 61.6, above the forecast of 58.0 points. On Thursday, the U.S releases unemployment claims.
British PMIs, which are highly regarded gauges of economic activity, all showed expansion in September. Services PMI slipped to 53.9, but was within expectations. Manufacturing PMI improved to 53.8, above the estimate of 52.6 points. Construction PMI dropped sharply from 52.9 to 52.1, missing the estimate of 52.8 points. Even though the PMIs continue to show growth in key economic sectors, there are signs of concern. The construction release was the weakest in six months, and the survey found that some construction firms were concerned that soft economic conditions were having a negative impact on their growth. Brexit remains a constant worry in the business sector, as the uncertainty as to whether a deal will be reached between the UK and the European Union continues to dampen sentiment over the British economy.
Prime Minister May finds herself in a difficult position, as she tries to convince her Conservative party and European leaders to accept her “Chequers” proposal regarding the UK exit from the European Union in March 2019. At the Conservative party conference on Wednesday, May said she wanted a deal with Europe, but not at any price. With Europeans leaders openly stating that Britain must be seen as paying a cost for leaving Europe, it’s an open a question whether Britain and the EU will be able to hammer out an agreement.
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