Pound sterling is looking mixed today. Looking at the pound against major peers, the currency is higher against the Australian dollar and the Canadian dollar, while selling off against the yen and the euro. The pound is flat against the US dollar. The main news today is that President Trump looks more likely to implement tariffs. As we wrote in our US dollar daily update, the resignation of economic adviser Gary Cohn has stoked fears that a trade war is imminent. While the pound was higher against the US dollar earlier today, it is currently flat. Turning to Brexit news, European Council President Donald Tusk has ruled out the possibility for the UK's financial services industry to remain in the single market. According to the Financial Times, Tusk has instructed EU negotiators that the UK will have to settle for a more orthodox free trade agreement (such as the recent EU-Canada deal). Given the UK's "red lines", the EU has argued that the scope for a broader deal is fairly limited. Our short-term outlook on the pound is neutral, while our medium-term outlook is bullish.
GBP/USD is currently above 1.3870. EUR/GBP is up, with the exchange rate above 0.8940. The pound is up against the Australian dollar and up against the Canadian dollar. GBP/AUD is currently above 1.7780, while GBP/CAD is above 1.7950.
Turning to UK economic data, markets will be watching upcoming Markit/CIPS services PMIs. Markit/CIPS services PMIs (54.5 vs. 53.4 expected) beat consensus estimates. BRC retail sales (0.6% vs. 0.4%) also beat expectations. Later today, 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.