GBP/USD has moved higher in the Wednesday session. In North American trade, GBP/USD is trading at 1.3085, up 0.26% on the day. On the release front, the monthly GDP release posted slight gain of 0.2%, matching the estimate. There was positive news on the manufacturing front, as manufacturing production climbed 0.9%, crushing the estimate of 0.2%. Over in the U.S., CPI was stronger than expected, with gain of 0.4%, above the estimate of 0.3%. Core CPI remained steady at 0.1%, shy of the estimate of 0.2%. Later in the day, the FOMC releases the minutes of the March policy meeting. On Thursday, the U.S. releases PPI.
The global trade war has taken a toll on manufacturing sectors worldwide, but British manufacturing data is pointing upwards. Manufacturing production in February climbed 0.9%, after a gain of 0.8% a month earlier. Last week, manufacturing PMI jumped to 55.1, its strongest gain in a year. The numbers are certainly positive, but could be a result of stockpiling as manufacturers brace for shortages once Britain leaves the European Union. Meanwhile, the latest Brexit extension expires on Friday, and both sides are keen to avoid a no-deal Brexit. Prime Minister May is seeking another short extension. European leaders have suggested a longer period, perhaps a year, but that is likely to inflame many of May’s conservative colleagues, who want to depart the EU as soon as possible. May is also holding talks with opposition leader Jeremy Corbyn, hoping to find some common ground in order to break the deadlock in parliament over Brexit.
On Wednesday, investors will be keeping a close look at Federal Reserve, which releases the minutes of the March meeting. At the meeting, the Fed said it would start tapering the reduction of its balance sheet in May. This marks a loosening of policy, and comes in response to weaker economic data out of the U.S. in recent months. The minutes should be treated as a market-mover, and if the minutes are dovish, investors could become sour on the U.S. dollar.