The pound is weaker this morning, particularly against the US dollar and the Canadian dollar. The currency is trading sideways against the euro while gaining against the Australian dollar. Looking at the latest Brexit news, The Telegraph is reporting that Theresa May is set to appoint a 'no deal' cabinet minister. In the event that the Brexit negotiations culminate without a trade deal, the 'no deal' cabinet minister will be responsible for making interim arrangements. The move will be seen as an attempt to show the EU that the UK is serious about a no deal scenario. While the pound is likely to remain volatile thanks to the political nature of Brexit, strong global growth supports continued strength in the pound. After a good year in 2017, we expect the pound to follow the euro higher. Our short-term and medium-term outlook on the pound remains bullish.
GBP/USD is currently above 1.3560. EUR/GBP is down this morning, with the exchange rate above 0.8890. The pound is up against both the Australian dollar and the Canadian dollar. GBP/AUD is currently above 1.7280, while GBP/CAD is above 1.6940.
This is a fairly light week for economic data relating to the pound. Later this morning, we'll see Halifax house prices. Tomorrow we'll get BRC retail sales. On Wednesday we'll get manufacturing output, industrial output and the trade balance. Last week, the pound rallied following stronger-than-expected services PMIs.
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.