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British pound lower despite good economic data

British pound daily update


British pound daily update

Pound sterling is mostly lower today. Looking at the British pound against its major peers, the pound is the weakest against the Australian dollar, the euro and the US dollar. Turning to the latest Brexit headlines, Prime Minister Theresa May has repeated that there will be no second referendum on Brexit. She also said that the two sides were close to a transition deal, while no "hard border" would be in place between Northern Ireland and Ireland. The currency traded at session highs following the announcement. Stefaan de Rynck, an adviser to the EU's Michel Barnier, has claimed that May's proposals are unworkable given the UK's "red lines" (including the free movement of people and membership in the customs union). Looking at economic data, Markit services PMIs were stronger than expected. As the services sector dominates British exports, a good outlook for services generally leads to a stronger pound. So far, good economic data has not had a significant impact on the currency. Our short-term outlook on the pound is neutral, while our medium-term outlook is bullish. 

GBP/USD is currently above 1.3820. EUR/GBP is up slightly, with the exchange rate above 0.8920. The pound is down slightly against the Australian dollar and flat against the Canadian dollar. GBP/AUD is currently above 1.780, while GBP/CAD is above 1.7950.

Turning to UK economic data, markets will be watching upcoming Markit/CIPS services PMIs. Markit/CIPS services PMIs (54.5 vs. 53.4 expected) beat consensus estimates. BRC retail sales (0.6% vs. 0.4%) also beat expectations. Tomorrow, we'll see Halifax house prices. On Thursday, we'll see the RICS housing survey. Finally, on Friday, we'll see industrial and manufacturing output. Last week, manufacturing and construction PMIs were ahead of estimates.


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