The pound is selling off against most currencies this morning, including the US dollar, the euro and the yen. GBP/USD remains close to 1.35, which has been an area of resistance for the pound in recent history. Looking at the latest Brexit headlines, the UK has warned the EU that it risks a financial crisis if it does not include financial services in a trade deal, according to Bloomberg. Barnier, the EU's chief negotiator, has said that there is no chance of UK financial institutions being granted the status of "generalized equivalence" (which allows UK institutions to serve EU customers with a British financial services license). In other news, UK chief negotiator David Davis has criticized the EU for making plans for a no-deal Brexit scenario according to The Financial Times. Davis has claimed that the EU's latest move could force British companies to move to the EU or jeopardize existing contracts. While the latest updates relating to Brexit are not particularly positive, we continue to call for a stronger pound thanks to strong regional growth and hope for a trade deal. Our short-term and medium-term outlook on the pound remains bullish.
GBP/USD is currently above 1.350. EUR/GBP is up this morning, with the exchange rate above 0.8830. The pound is down against both the Australian dollar and the Canadian dollar. GBP/AUD is currently above 1.7260, while GBP/CAD is above 1.6830.
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%). Later today, we'll get manufacturing output, industrial output and the trade balance. Last week, the pound rallied following stronger-than-expected services PMIs.