Upbeat U.S. Data Can't Help Dollar as Sterling Reigns Supreme
The U.S. dollar little changed Thursday as mostly upbeat economic data was offset by strong rise in sterling on bets the U.K. will avoid leaving the EU without a trade deal.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.08% to 95.76.
As U.K. Prime Minister Theresa May seeks cross-party consensus on a Brexit deal after her government won a vote of confidence on Wednesday, traders continue to bet on the UK securing a withdrawal deal, pushing the pound higher against the greenback.
The way forward on Brexit, however, is paved with uncertainty as Labor leader, Jeremy Corbyn, has refused to enter cross-party talks demanding May rule out a no-deal Brexit. That is a demand which May has stressed is “impossible.”
GBP/USD rose 0.76% to $1.2979.
The pound's strength kept a lid on gains in the greenback even as a key manufacturing report and labor data topped economists’ estimates.
The Philadelphia Fed said Thursday its manufacturing index rose to a reading of 17 in January from a revised 9.1 last month.
The U.S. Department of Labor reported Thursday that initial jobless claims dropped by 3,000 to a seasonally adjusted 213,000, beating economists’ forecast for a drop to 216,000.
The upbeat regional manufacturing report comes a day after the Fed’s Beige Book – an economic report, based on anecdotal information collected by the Fed’s 12 reserve banks – highlighted concerns about manufacturing growth amid rising costs, trade and political uncertainty.
Elsewhere, EUR/USD fell 0.14% $1.1381, while USD/CAD rose 0.34% to C$1.3299 as falling oil prices weighed on the loonie, supporting gains in the pair.
USD/JPY fell 0.02% to Y109.06.