The British pound was weaker yesterday (particularly against the euro) and remains weak this morning. As we wrote yesterday, rising Eurozone bond yields have resulted in a stronger euro in the past few days. While British bond yields are also rising, euro yields are relatively higher. The pound is therefore weaker as a result. Looking at news, GfK consumer confidence figures were below expectations. While the consensus estimate was already fairly weak, the actual numbers were even weaker. The pound sold off following the announcement. Despite recent weakness, our short-term and medium-term outlook remains bullish. Following the holidays, we expect more Brexit news updates to strengthen the pound in early 2018.
GBP/USD is currently just above 1.3350. EUR/GBP is up today and the pair is currently trading above 0.8880. The pound is flat against both the Australian dollar and the Canadian dollar. GBP/AUD is above 1.7420, while GBP/CAD is just above 1.7120.
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 in Parliament. GfK consumer confidence figures (-13 vs. -12 expected) were worse than expected. 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.