Pound sterling is currently higher against all major currencies except the Australian dollar and the Canadian dollar. Yesterday, the currency ended the day slightly higher following better-than-expected house price growth. Today, the British pound is strengthening following recent comments from Chinese President Xi which helped alleviate concerns of a trade war. We covered Xi's comments in our US dollar daily update.
In recent history, domestic data including house price growth and retail sales have been stronger than expected. While Brexit-related headlines have had a big influence on the pound, there have been few recent developments as Parliament is currently in recess. As a result, the pound has been strengthening as traders price in another 0.25% rate hike in May. We expect to upgrade our short-term outlook on the pound to bullish in the near future. For now, our short-term outlook on the pound is neutral, while our medium-term outlook remains bullish.
GBP/USD is currently above 1.410. EUR/GBP is down, with the exchange rate above 0.870. The pound is down against the Australian dollar and flat against the Canadian dollar. GBP/AUD is currently above 1.830, while GBP/CAD is above 1.7940.
This is a fairly light week for economic data relating to the British pound. BRC retail sales (1.4% vs. -0.1% expected) were ahead of expectations. Tomorrow, the most important day, we'll see economic data including February industrial production, February manufacturing production and the February goods trade balance. On Thursday, we'll see the BoE credit conditions survey. Last week, services PMIs missed expectations by a significant margin.
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.