The pound remains weaker after Theresa May and Jean-Claude Juncker failed to come to an agreement earlier this week. After rising above 1.35, GBP/USD is now trading below 1.3450 as a result. In other news, Sky News is reporting that an Islamist plot to assassinate Theresa May has been foiled. The pound fell after the news was published, thanks to increasing political risk in the UK. Looking at economic data, BRC retail sales were stronger than the previous print while Markit Services PMIs were lower than expectations. Our short-term and medium-term outlook remain bullish.
GBP/USD is currently just above 1.3410. EUR/GBP is up today and the pair is currently trading above 0.8810. The pound is flat against both the Australian dollar and the Canadian dollar. GBP/AUD is above 1.770, while GBP/CAD is just above 1.70.
This week’s economic data includes PMIs, retail sales and industrial/manufacturing production. PMI construction beat expectations (53.1 vs. 51 expected). Earlier today, BRC Retail Sales were higher than the previous print (0.6% vs. -1% prior). Markit Services PMIs were lower than expectations (53.8 vs. 55 expected). Finally on Friday we’ll get industrial and manufacturing production. Last week, data relating to housing and home price growth suggested a sluggish outlook for real estate.
As the pound rises following Theresa May's calls for an election, we are now bullish on the currency in the medium-term. The pound is now trading within normal conditions. This is based on a range of technical indicators looking at a weekly chart.