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British pound daily update for 24th January 2018

BY DEB SHAW | 

The British pound continues to make gains. GBP/USD is now firmly above 1.40. The currency is flat against the euro and the Australian dollar today. In recent times, the pound has benefited from strong UK economic data and regional growth. Looking at the latest figures, the UK's public sector borrowing was much lower than expected due to strong tax receipts. Overall taxes tend to rise when underlying growth in strong. The CBI industrial trends survey was also stronger than expected, suggesting a sunny outlook for the manufacturing sector. Looking at the Eurozone (the UK's largest trading partner), both the ZEW economic sentiment survey and consumer confidence was much higher than expected. Strong regional growth has historically had a positive impact on both the euro and the pound. While there are good reasons for the longer-term pound rally to continue, note that the currency is looking overbought on a daily and weekly time frame. This raises the risk of a short-term correction. Our short-term and medium-term outlook on the pound remains bullish.     

GBP/USD is currently above 1.40. EUR/GBP is flat, with the exchange rate above 0.8770. The pound is flat against the Australian dollar while trading slightly higher against the Canadian dollar. GBP/AUD is currently above 1.750, while GBP/CAD is above 1.7410.

Looking at economic data this week, markets will be watching jobless claims and Q4 GDP figures. Later today, we'll see the claimant count, average earnings and the ILO unemployment rate. On Friday, we'll see Q4 GDP. Last week, inflation figures met expectations while retail sales were much lower than expected. 

Updated 
Outlook
Bearish

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