The pound is mostly flat this morning, although the currency has registered small gains versus the US dollar. As there is a Bank of England interest rate decision and meeting later this week (Thursday), the pound is likely to trade sideways prior to the event. In an earlier thought piece, we noted the limited number of catalysts behind the pound today, given substantial Brexit-induced uncertainty and the likelihood weaker growth numbers in the near future. Since we published that commentary, the pound has traded sideways against the dollar.
GBP/USD is currently just above 1.310. EUR/GBP is flat this morning, and is currently trading below 0.8850. The pound is up slightly against both the Australian dollar and the Canadian dollar. GBP/AUD is below 1.7120, while GBP/CAD is just below 1.6850.
This is a big week for the pound, as the much-anticipated Bank of England rate hike may be announced on Thursday. On Monday we’ll see consumer credit and mortgage approvals. On Tuesday we’ll get consumer confidence. On Wednesday we’ll see Markit manufacturing PMIs. Thursday is the key day, with the BoE interest rate decision, monetary policy summary, minutes and inflation report. Last week, GDP figures beat expectations.
After strengthening in the second week of October, we are now neutral on the British pound. The pound rebounded after senior Conservative Party leaders publicly backed Theresa May, suggesting that rumors of May's resignation were unfounded. The pound has been particularly strong against the US dollar and the euro in recent times. After looking overbought on a range of technical indicators, the pound is now back to trading within normal conditions.