While the pound strengthened against the dollar yesterday, its performance has been mixed relative to other currencies. The dollar is selling off thanks to rising doubts regarding Trump's ability to get tax reforms done, while the euro has been strengthening following Puigdemont's decision to delay the consequences of the vote. Yesterday's economic data releases painted a mixed picture for the currency. While both industrial and manufacturing output figures rose above expectations, the UK's record trade deficit hurt the pound. While the medium-term picture for the pound remains weak, there are many catalysts that can help the currency strengthen in the short term. We covered our recent views on the pound in a thought piece recently.
GBP/USD stalled around 1.32 and is currently trading below 1.3190. EUR/GBP is up slightly today and is currently trading above 0.8960. The pound is down slightly against the Australian dollar and the Canadian dollar this morning, with GBP/AUD around 1.6940 and GBP/CAD around 1.650.
After various survey data points last week, this week will include a fair amount of macroeconomic data for the UK. Retail sales came in quite strong (1.9%) vs. previous figures (1.3%). Yesterday's manufacturing (2.8% vs. 1.9% expected) and industrial production figures (1.6% vs. 0.8% expected) beat expectations. Trade balance data came in very weak (-14.2b vs. -11.2b expected). Later today, we’ll get house price data. Last week's survey data suggested good services growth, while construction and manufacturing PMIs came in below expectations.