The British pound is up for a sixth session, and has been strengthening in anticipation of the Autumn Forecast Statement scheduled for tomorrow. Looking at news, The Independent is reporting that Theresa May has the green light to increase the 'Brexit bill' to €40b in order to move discussions forward. In exchange for the higher sum, the UK will be looking for a transition agreement and a good free trade deal. As the odds of a Brexit deal increase, this is good news for the pound. Over the weekend, finance minister Philip Hammond claimed that the UK will present its exit terms to the EU before December's summit. Our short-term outlook on the currency remains bullish.
GBP/USD is currently just above 1.3260. EUR/GBP is down today and the pair is currently trading above 0.8850. The pound is up against both the Australian dollar and the Canadian dollar. GBP/AUD is above 1.7580, while GBP/CAD is just above 1.690.
This week’s economic data includes the Autumn Forecast Statement as well as Q3 GDP numbers. On Tuesday we’ll see public sector net borrowing as well as inflation report hearings. On Wednesday, we’ll see the Autumn Forecast Statement. Thursday is the big day, and we’ll see Q3 GDP figures. Last week, CPI was below expectations while retail sales were better than average estimates.
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.