Good afternoon,
The pound is still holding its ground against the dollar, with the GBP/USD cross coming close to its highest levels since 2nd October in the early hours of this morning.
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Following yesterday's excellent Manufacturing PMI reading and this morning's better than forecast Construction PMI figures, the GBP/USD cross is still trading above $1.29.
GBP/USD graph
However, the gains for Sterling have been limited and could well be short-lived as markets are beginning to focus on the difficulties of the upcoming Brexit negotiations.
Recent media reports have suggested that Britain will need to fork out around €100 billion in order to leave the EU, but Brexit minister David Davis has been quick to respond by saying the UK will not pay that amount.
Yesterday UK Prime Minister Theresa May announced she will be "a bloody difficult woman" during the official talks, after being accused of having "illusions" over any potential deal.
The recent comments have left investors erring on the side of caution and is the main reason the pound has been unable to take full advantage of the positive economic data we have seen over the past two days.
Federal Reserve
Later this evening the U.S. Federal Reserve will announce their latest interest rate decision, which will then be followed by a statement by Fed Chair Janet Yellen.
Although it is highly unlikely we will see the U.S. central bank take any action tonight, if Janet Yellen provides clues as to when the next hike will be, we could see some volatility for all dollar crosses.
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