The British pound is up slightly this morning. The currency has been strengthening in anticipation of the Autumn Forecast Statement later today. Markets will be looking for clues relating to the Brexit bill and the government's spending plans. Recent data showed that UK government borrowing is much stronger than expected. As stimulus and Brexit-related expectations rise, the pound is strengthening as a result. Our short-term outlook on the pound is bullish.
GBP/USD is currently just above 1.3250. EUR/GBP is flat today and the pair is currently trading above 0.8860. The pound is flat against both the Australian dollar and the Canadian dollar. GBP/AUD is above 1.7470, while GBP/CAD is just above 1.690.
This week’s economic data includes the Autumn Forecast Statement as well as Q3 GDP numbers. Public sector net borrowing was higher than expected (8b vs. 7b expected) while the inflation report hearings contained no new surprises. Later today, 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.
As the pound enjoys a rebound, we are upgrading the currency to bullish in the short-term. The pound is trading within normal conditions. This is based on various technical indicators on a daily chart.
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.