The British pound has been fairly mixed in the past two days. The currency sold off against the US dollar and the euro yesterday. GBP/USD fell after Trump claimed the US dollar would get "stronger and stronger". The pound also fell against the euro, as the recent ECB meeting contained few new surprises. As the pound is looking fairly overbought on a daily and weekly chart of the currency (based on technical indicators), the short-term correction is not particularly surprising. Over the longer-term, we continue to believe that the pound can continue rallying. Looking at the latest economic data, traders will be watching upcoming Q4 GDP numbers later today. UK economic growth has been surprisingly strong in 2017. Our short-term and medium-term outlook on the pound remains bullish.
GBP/USD is currently above 1.4210. EUR/GBP is up slightly, with the exchange rate above 0.8760. The pound is down against the Australian dollar and the Canadian dollar. GBP/AUD is currently above 1.7610, while GBP/CAD is above 1.7560.
Looking at economic data this week, markets will be watching jobless claims and Q4 GDP figures. The claimant count was above expectations (8.6k vs. 5.4k expected) while average earnings (2.4% vs. 2.5% expected) and new jobs (102 vs -13k expected) were ahead of expectations. Later today, we'll see Q4 GDP. Last week, inflation figures met expectations while retail sales were much lower than expected.
As the pound continues to strengthen, we are now bullish on the currency in the medium-term. The pound is now looking overbought. This is based on a range of technical indicators looking at a weekly chart.