The pound fell last Friday following reports that trade talks with the EU would not start until next spring at the earliest. There were some hopes that trade talks could start sooner following the latest breakthrough in negotiations. This morning, the pound is enjoying a mild rebound. Over the weekend, Foreign Minister Boris Johnson said that the UK cannot become Brussels' "vassal state". According to Reuters, Johnson is calling for the UK to do "proper trade deals" with countries outside of the EU. As the Bank of England is set to remain on hold following last week's meeting, Brexit headlines will once again drive pound trading. As the volume of news reports is set to decline into the holiday season, the pound is more likely to trade sideways. Our short-term and medium-term outlook remain bullish.
GBP/USD is currently just above 1.3340. EUR/GBP is flat 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 1.740, while GBP/CAD is just above 1.7140.
This is a fairly light week for economic data and events from the UK. On Wednesday, Bank of England Governor Carney is set to make a speech. On Thursday we’ll see consumer confidence figures. Finally on Friday we’ll see Q3 GDP growth and the current account. Last week, the Bank of England suggested only gradual increases in future interest rates.
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.