The pound is mostly weak this morning, especially against the Australian dollar and the yen. The currency is slightly weaker against the euro and the US dollar. Looking at the latest economic data, Halifax house prices were below expectations. BRC retail sales were in line with previous figures. As markets are pricing in a slowdown in UK house prices and limited growth in retail sales, reactions in the pound were fairly limited following the data releases. Looking at politics, the Financial Times is reporting that Theresa May's attempts to reshuffle her cabinet have gone awry. She has appointed pro-EU justice secretary David Lidington to the cabinet office, where he will oversee various Brexit committees. Justine Greening has quit her cabinet position (after being asked to move to the Work and Pensions department) while Jeremy Hunt has refused to leave his position as Health Secretary. Instead of establishing May's authority, the current chaos reinforces the view that she has limited influence over her cabinet. So far, the pound has taken the news in stride. Our short-term and medium-term outlook on the pound remains bullish.
GBP/USD is currently above 1.3550. EUR/GBP is up slightly this morning, with the exchange rate above 0.8820. The pound is up against both the Australian dollar and the Canadian dollar. GBP/AUD is currently above 1.7240, while GBP/CAD is above 1.6810.
This is a fairly light week for economic data relating to the pound. Annualized quarter-over-quarter Halifax house prices (2.7% vs. 3.3% expected) missed expectations. Month-over-month BRC retail sales matched the previous figures (0.6%). Tomorrow, we'll get manufacturing output, industrial output and the trade balance. Last week, the pound rallied following stronger-than-expected services PMIs.