The pound had a good day yesterday, and rose against most major currencies including the US dollar and the euro. Looking at news, Prime Minister Theresa May spoke to British businesses at a CBI conference yesterday. She suggested that Brexit-related certainty for business would be achieved as soon as possible. Specifically she said: "Throughout this process, I have been determined to give business and industry as much certainty as possible. Achieving that maximum certainty was the first objective I set in my Lancaster House speech in January and it has remained fundamental to the Government’s negotiations to date." Brexit headlines once again dominate pound trading.
GBP/USD is currently just above 1.3140. EUR/GBP is down and the pair is currently trading above 0.8810. The pound is currently flat against both the Australian dollar and the Canadian dollar. GBP/AUD is above 1.7140, while GBP/CAD is just below 1.6730.
Looking at the economic calendar for the pound this week, it includes retail sales, GDP estimates and industrial production figures. Later today, we’ll see retail sales numbers and NIESR GDP growth estimates for October. On Thursday, we’ll see RICS Housing Price Balance survey data. Finally, on Friday we’ll see industrial production, manufacturing production and trade balances. Last week, the Bank of England hiked rates while dampening expectations of more rate cuts in the future.
As the pound strengthens on hopes for a Brexit deal, we are upgrading the pound to neutral in the short-term. While we had warned that the currency was oversold in early October and was looking due for a rebound, the pound has since re-entered normal trading conditions.
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.