In the latter case, DUP MPs have threatened to vote against the UK government’s budget on 29 October if it looks like Northern Ireland will be subject to a backstop after Brexit.
DUP leader Arlene Foster has stressed that any separation from the rest of the UK after Brexit is untenable.
She said: “We can’t have a customs or regulatory barrier in the Irish Sea because that would cause us to be a rule-taker from Europe.”
The DUP aligned with the Conservative Party to form a majority after the 2017 general election, so their continued support is vital for the Government’s survival.
On the other side of Brexit talks, EU Chief Negotiator Michel Barnier suggested a minimal impact Ireland-Northern Ireland divide; whether this is acceptable to the DUP remains to be seen.
Mr Barnier’s proposal aims to cause the least-possible disruption between Ireland and Northern Ireland.
He said: “Our proposal limits itself to what is absolutely necessary to avoid a hard border: customs procedures and the respect of EU standards for products.”
Meanwhile, the US dollar has held steady against the pound and most other currency peers following Wednesday’s Federal Reserve speeches.
Fed policymakers Raphael Bostic and Charles Evans both displayed a ‘business-as-usual’ attitude, but didn’t appear to offer strong support for more interest rate hikes in 2019.
Looking ahead, the next economic data that could influence demand for pound Sterling will be this morning’s speech from Bank of England (BoE) policymaker Gertjan Vlieghe.
Mr Vlieghe could boost the pound US dollar exchange rate if he touches on BoE interest rate decisions in his remarks.
Given current uncertainties about whether the BoE will raise interest rates in 2019, any indication of such a course of action could cause a sharp Sterling rise.
The rest of Thursday’s economic news will come from the US, covering core and base inflation rates for September.
Current expectations are for a faster pace of core inflation but a slowdown in base yearly inflation; such results could still lead to USD/GBP exchange rate gains.
If the base and core annual readings print as forecast then they will still be above the Federal Reserve’s 2 per cent inflation target range, which will make additional Fed interest rate hikes more likely.