Pound sterling is higher against all major currencies (except the Australian dollar) today. The pound is currently the strongest against the Japanese yen and the US dollar. As global risk sentiment strengthens, "risk-on" currencies are currently doing well while safe haven currencies are weakening. Last week, the pound managed to make gains in spite of a significant stock market sell-off and fears of a trade war thanks to the announcement of a Brexit transition deal. While the Bank of England did not suggest that a rate hike was to be expected, most traders expect the Bank to hike rates again in May. The pound is thus rallying given the UK's improving prospects for international trade and rate hike expectations. Our short-term and medium-term outlook on the pound remains bullish.
GBP/USD is currently above 1.4180. EUR/GBP is down slightly, with the exchange rate above 0.8720. The pound is down against the Australian dollar and flat against the Canadian dollar. GBP/AUD is currently above 1.8330, while GBP/CAD is above 1.8220.
This is a fairly light week for economic data from the United Kingdom. On Tuesday, we'll see the Bank of England's Financial Policy Committee statement. Thursday is the key day, and we'll get the second-take of Q4 GDP growth, February mortgage approvals, Nationwide housing prices, the current account and Q4 business investment. On Friday, we'll see GfK consumer confidence for March. Last week, the announcement of a Brexit transition deal sent the pound soaring.
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.