The British pound is down this morning after yesterday's sharp rise. The currency is selling off after moving into short-term overbought conditions. Looking at yesterday's Autumn Forecast Statement, GDP growth expectations have been lowered substantially due to the impact from Brexit. Overall, the statement matched expectations and contained few surprises. Later today, Q3 GDP (2nd release) will confirm to what extent the British economy is slowing down to the uncertainties triggered by Brexit.
GBP/USD is currently just above 1.330. EUR/GBP is up today and the pair is currently trading above 0.890. The pound is down against both the Australian dollar and the Canadian dollar. GBP/AUD is above 1.7450, while GBP/CAD is just above 1.6880.
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. The Autumn Forecast Statement contained few surprises. Later today, 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.