Pound sterling is higher against all major currencies today. The British pound is currently the strongest against the Japanese yen, the Canadian dollar and the US dollar. Yesterday, the pound strengthened at the outset of the day, but began weakening after worse-than-expected wage growth and unemployment claims. Looking at GBP/USD, the pair has already made back some of yesterday's losses.
Turning to data, traders will be watching upcoming inflation figures. The consensus estimate for the March consumer price index is 2.7%. If inflation remains high, expect the pound to keep strengthening as rate hike odds increase. If inflation misses estimates, the pound is more likely to sell off (mirroring yesterday's moves in the currency).
Looking at the technical picture for the pound, the currency is looking stretched as recent strength has been accompanied by decelerating trading volumes. The currency is also close to resistance levels based on technical indicators such as the Relative Strength Index. While the trend remains firmly bullish, there is significant short-term resistance to further strength. Our short-term and medium-term outlook on the pound remains bullish
GBP/USD is currently above 1.430. EUR/GBP is down slightly, with the exchange rate above 0.8640. The pound is up against the Australian dollar and up against the Canadian dollar. GBP/AUD is currently above 1.8410, while GBP/CAD is above 1.7980.
Looking at this week’s economic data from the United Kingdom, there are a fair number of significant items on the calendar. Average earnings (2.8% vs. 3.0% expected) and the claimant count change for February (11.6k vs. 5k expected) both missed consensus estimates. Later today, we’ll see inflation figures including the year-over-year consumer price index, retail price index and producer price index for March. On Thursday, we’ll see year-over-year retail sales for March. Last week, industrial and manufacturing production figures for February missed 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.