Pound sterling is mostly mixed today. Looking at the British pound against its major peers, the pound is weaker against the Japanese yen and US dollar while gaining against the euro and the Australian dollar. As President Trump's tariffs and Italian elections are the main focus of markets today, Brexit-related news is currently taking a back seat. If the outcome of Italian elections cause a prolonged sell-off in the euro, expect the pound to turn weaker against the US dollar. Broadly speaking, pound sterling tends to track the fortunes of the euro given the UK's significant trading relationship with the region. Turning to the latest Brexit news, Prime Minister Theresa May appears to have successfully negotiated a deal between pro and anti-EU elements in the Conservative Party. According to Bloomberg, leading Conservatives including Jacob Rees-Mogg and Nicky Morgan have stated that May's position is pragmatic. Reactions from the EU have been fairly negative, as the bloc is keen to stop the UK from "cherry picking" the best elements of the single market. Our short-term outlook on the pound is neutral, while our medium-term outlook is bullish.
GBP/USD is currently above 1.3770. EUR/GBP is flat, with the exchange rate above 0.8910. The pound is up slightly against the Australian dollar and flat against the Canadian dollar. GBP/AUD is currently above 1.780, while GBP/CAD is above 1.7780.
Turning to UK economic data, markets will be watching upcoming Markit/CIPS services PMIs. Later today, we'll see Markit/CIPS services PMIs. Last month's figures came in below estimates. Tomorrow we'll see BRC retail sales. On Wednesday, we'll see Halifax house prices. On Thursday, we'll see the RICS housing survey. Finally, on Friday, we'll see industrial and manufacturing output. Last week, manufacturing and construction PMIs were ahead of estimates.
As the pound continues to strengthen, we are now bullish on the currency in the medium-term. The pound is now looking trading within normal conditions. This is based on a range of technical indicators looking at a weekly chart.