Yesterday was a pretty wild day for the British pound. After strengthening in the morning, the pound fell sharply following comments from Davis and Barnier suggesting limited progress in the Brexit talks. The two sides have been unable to agree on Britain's exit payment. Later in the day, the currency jumped on news that the EU was considering offering the UK a 2-year extension. According to German newspaper Handelsblatt, the offer is tied to the UK remaining as part of the EU, but giving up its voting rights. This morning, the pound continues to broadly strengthen against most its major peers.
GBP/USD is currently just above 1.33, having strengthened for the last five consecutive days. EUR/GBP is down this morning (after falling yesterday) and is currently trading below 0.8880. The pound is flat against both the Australian dollar and the Canadian dollar, with GBP/AUD around 1.670 and GBP/CAD around 1.6570.
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%). Tuesday'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). Today's house price data beat expectations (6 vs 4 expected). Last week's survey data suggested good services growth, while construction and manufacturing PMIs came in below expectations.