The British pound is mixed today. Looking at the currency against its major peers, pound sterling is slightly higher against the US dollar and slightly lower against the euro. There have been a fair number of Brexit-related announcements in the past two days. Yesterday, Labour leader Jeremy Corbyn outlined his vision for Brexit. Unlike Theresa May, Corbyn is taking a softer stance and supports joining the customs union. May has ruled out joining the customs union as this would prevent the UK from striking trade deals independently following Brexit. Corbyn's position is problematic for the Conservatives as the current government enjoys a slim majority in Parliament. If a few Conservative MPs vote against the final Brexit bill, May will be unable to get her deal through Parliament. In a previous commentary on the process, we explained why recent events point towards a "soft" Brexit. In other news, the EU is set to publish a draft 100-page Brexit treaty deal today. According to Bloomberg, the draft is set to ignore many of Theresa May's demands. The EU has rejected May's "three baskets" approach, and has repeatedly warned the UK against cherry picking aspects of the single market. Our short-term outlook on the pound is neutral, while our medium-term outlook is bullish.
GBP/USD is currently above 1.3970. EUR/GBP is flat, with the exchange rate above 0.8820. The pound is flat against the Australian dollar and up against the Canadian dollar. GBP/AUD is currently above 1.780, while GBP/CAD is above 1.7710.
This is a fairly light week for UK economic data. MPC member Jon Cunliffe said that London's role as a financial center is not limited to the EU. On Wednesday, we’ll see Gfk consumer confidence numbers for February and Nationwide house prices. On Thursday, we’ll see Markit manufacturing PMIs, consumer credit and new mortgage approvals. On Friday, we’ll get construction PMIs. Last week, BoE Governor Mark Carney provided an upbeat outlook for growth and inflation in the UK this year.