The British pound continues to do well against the US dollar, while trading sideways against the euro and the Canadian dollar. Looking at the latest Brexit-related headlines, British media commentators continue to debate the potential for a second Brexit referendum. The idea was surfaced by ex-UKIP leader Nigel Farage last week. While Prime Minister Theresa May has ruled out another referendum, some in the UK believe that another vote is necessary. As we wrote in our take on futures data last week, speculators are increasingly bullish on the British pound. As regional growth remains strong, the conditions for a pound bull market remain intact. Our short-term and medium-term outlook on the pound remains bullish.
GBP/USD is currently above 1.3740. EUR/GBP is flat this morning, with the exchange rate above 0.8880. The pound is down against the Australian dollar and flat against the Canadian dollar. GBP/AUD is currently above 1.7280, while GBP/CAD is above 1.710.
Looking at economic data this week, markets will be watching inflation and retail sales numbers. On Tuesday, we'll see the producer price index and the consumer price index. With the impact of Brexit-fuelled inflation likely to be waning, the consensus estimate for CPI (3.2%) looks fairly high. On Thursday we'll get the RICS housing price balance. Finally, on Friday we'll see retail sales. Last week, manufacturing and industrial output beat expectations.