The British pound is stronger today, particularly against the euro. The big news today is that German coalition talks have collapsed. This has led to broad weakness in the euro as political uncertainties increase in the Eurozone's largest economy. With regards to Brexit, the Financial Times is reporting that Theresa May is likely to get the green light for a larger "Brexit bill" later today. Cabinet ministers including foreign secretary Boris Johnson have agreed to increase the size of the payment from €20b to €40b. As the likelihood of a Brexit deal increases, the pound is likely to continue rallying. Our short-term outlook on the currency remains bullish.
GBP/USD is currently just above 1.3220. EUR/GBP is down today and the pair is currently trading above 0.8880. The pound is up against both the Australian dollar and the Canadian dollar. GBP/AUD is above 1.7490, while GBP/CAD is just above 1.690.
This week’s economic data includes the Autumn Forecast Statement as well as Q3 GDP numbers. On Tuesday we’ll see public sector net borrowing as well as inflation report hearings. On Wednesday, we’ll see the Autumn Forecast Statement. Thursday is the big day, and we’ll see Q3 GDP figures. Last week, CPI was below expectations while retail sales were better than average estimates.