Dollar Surges Against Pound After UK Government Resignations
November 15 2018 - 09:36AM
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The dollar has leaped against the British pound Thursday in the
wake of some high profile UK government resignations. Traders are
also reacting to a deluge of U.S. economic data.
Retail sales in the U.S. increased by more than anticipated in
the month of October, the Commerce Department revealed in a report
released on Thursday. The Commerce Department said retail sales
advanced by 0.8 percent in October following a revised 0.1 percent
dip in September.
Economists had expected retail sales to climb by 0.5 percent
compared to the 0.1 percent uptick originally reported for the
previous month.
First-time claims for U.S. unemployment benefits unexpectedly
showed a slight increase in the week ended November 10th, according
to a report released by the Labor Department on Thursday. The
report said initial jobless claims inched up to 216,000, an
increase of 2,000 from the previous week's unrevised level of
214,000. Economists had expected jobless claims to edge down to
212,000.
A report released by the Federal Reserve Bank of New York on
Thursday showed the pace of growth in New York manufacturing
activity unexpectedly accelerated in the month of November.
The New York Fed said its general business conditions index rose
to 23.3 in November from 21.1 in October, with a positive reading
indicating growth in regional manufacturing activity. Economists
had expected the index to dip to 20.0.
Growth in Philadelphia-area manufacturing activity slowed by
much more than expected in the month of November, according to a
report released by the Federal Reserve Bank of Philadelphia on
Thursday.
The Philly Fed said its diffusion index for current general
activity tumbled to 12.9 in November from 22.2 in September,
although a positive reading still indicates growth in regional
manufacturing activity. The index had been expected to dip to
20.0.
A report released by the Labor Department on Thursday showed
U.S. import and export prices both rose by more than expected in
the month of October.
The Labor Department said import prices climbed by 0.5 percent
in October after rising by a downwardly revised 0.2 in
September.
Economists had expected import prices to inch up by 0.1 percent
compared to the 0.5 percent increase originally reported for the
previous month.
Meanwhile, the report said export prices rose by 0.4 percent in
October after coming in unchanged in September. Export prices had
also been expected to tick up by 0.1 percent.
Business inventories in the U.S. increased in line with
economist estimates in the month of September, according to a
report released by the Commerce Department on Thursday. The
Commerce Department said business inventories rose by 0.3 percent
in September after climbing by 0.5 percent in August. Economists
had expected inventories to rise by 0.3 percent.
The dollar rose to an early high of $1.1270 against the Euro
Thursday, but has since retreated to around $1.1350.
U.K. Brexit Secretary Dominic Raab and Junior Brexit minister
Suella Braverman quit from the government, protesting against Prime
Minister Theresa May's Brexit plans.
Raab announced that his resignation was due to disagreement over
"the regulatory regime proposed for Northern Ireland" that poses "a
very real threat to the integrity of the United Kingdom."
Raab's departure came shortly after the resignations of Work and
Pensions minister Esther McVey and Northern Ireland minister
Shailesh Vara over the plans.
The resignations of cabinet ministers are a big blow to Prime
Minister Theresa May, who is struggling to get support from
lawmakers in Parliament to accept the agreement with the European
Union.
The buck has surged to a 2-week high of $1.2775 against the
pound sterling Thursday afternoon, from an early low of
$1.3030.
UK retail sales declined for a second straight month in October,
defying expectations for an increase, amid a sharp decrease in
sales of household goods, preliminary data from the Office for
National Statistics showed on Thursday.
Sales volume including automotive fuel dropped 0.5 percent from
September, when they fell 0.4 percent, revised from a 0.8 percent
slump. Economists had forecast a 0.2 percent increase.
On a year-on-year basis, retail sales volume grew 2.2 percent in
October, which was the slowest pace in six months. Economists were
looking for a 2.8 percent gain.
The greenback slid to an early low of Y113.097 against the
Japanese Yen Thursday, but has since bounced back to around
Y113.575.
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