Pound sterling is currently mixed. The British pound is rising against the US dollar and the Japanese yen, while selling off against the Australian dollar and the Canadian dollar. Yesterday, the currency performed well despite a significant sell-off in equity and commodity markets during US trading hours. Looking at GBP/USD, the pair ended the day higher despite a rebound in the US dollar.
Turning to news, there are few notable developments relating to Brexit. Upcoming manufacturing PMIs should provide further cues regarding UK economic growth this year. Recent sentiment surveys have been fairly weak. US manufacturing PMIs missed expectations yesterday, while previous figures from the Eurozone have also been weak. Our short-term and medium-term outlook on the pound remains bullish.
GBP/USD is currently above 1.4060. EUR/GBP is flat, with the exchange rate above 0.8750. The pound is down against the Australian dollar and down slightly against the Canadian dollar. GBP/AUD is currently above 1.8250, while GBP/CAD is above 1.810.
This is a fairly light week for economic data relating to the British pound. Later today, we’ll see Markit manufacturing PMIs (March). On Wednesday, we’ll see the BRC shop price index (January) and construction PMIs for March. On Thursday, the most important day, we’ll see Markit services PMIs (March). Last week, the final-take of Q4 GDP growth (1.4%) met expectations.
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.