FX round-up: Pound finds slight bid even as US dollar grinds higher

The pound edged higher on Thursday on the back of reports that the UK was preparing its own backstop deal to guard against the risk of delays in the Brexit negotiations that might see the country simply crash out.

Thus, by 2150 BST Sterling was 0.2% higher against the US dollar to 1.35138, even as the US dollar spot index recovered from a dip overnight to edge a tad higher.

Bolstering the American currency, the closely-followed US Philly Fed manufacturing index surprised analysts with a jump from a reading of 23.2 for April to 34.4 in May.

However, analysts at Pantheon Macroeconomics said a surge in the new orders sub-index, which had boosted the headline gauge, was likely more a correction following a "soft" print in the month before.

That new orders sub-index had rocketed from a reading of 18.4 to 40.6 - its strongest reading since March 1973.

In parallel, initial US jobless claims were reported at up by 11,000 to 222,000 for the week ending on 5 May.

That was higher than the 215,000 that analysts at Barclays had penciled-in.

Yet according to Barclays's Michael Gapen, it was still quite possible that the insured unemployment rate - which tracks the number of people claiming unemployment benefits for at least the second time - might fall below 1.0% later in 2018 or towards the start of 2019.

Indeed, the data on continuing claims which was also contained in Thursday's jobless claims report showed the insured unemployment rate ticking lower to 1.2%, which was a fresh record low for the series going all the way back to 1971.

On the other side of the Channel meanwhile, markets were focused on the results of talks to form a government coalition in Italy.

However, while the leader of the anti-establishment Five Star had said a final deal would be thrashed out on Thursday and that much progress had already been made, even as his potential coalition partners in the League said that a deal had not yet been reached.

To take note of, and acting as a backdrop, the spotlight was on the start of the second round of trade talks between China and the US, in Washington.