Pound sterling is currently strengthening against all major currencies. The British pound is the strongest against the Australian dollar, the Canadian dollar and the US dollar today. Yesterday, the currency strengthened against all major currencies except the US dollar and the Japanese yen. The pound was unfortunately dragged down by ECB-related disappointment. Given the UK's significant trading relationship with the Eurozone, the pound tends to broadly track the fortunes of the euro.
Turning to recent news, April Nationwide housing prices met expectations, and accelerated from previous figures. Despite a slowdown in the London housing market, house prices across the country continue to grow. In a few hours, we'll see Q1 GDP growth and hear from the Bank of England's Mark Carney and Haldane.
Looking at Brexit news, Home Secretary Amber Rudd has refused to rule out a customs union with the EU. According to the Financial Times (paywall), she stated that the customs union issue remains a cabinet discussion item. Earlier today, pro-Brexit Foreign Secretary Boris Johnson claimed that the UK would not pursue a customs union. For now, Theresa May's cabinet remains deeply divided on the issue. Our short-term outlook on the pound is neutral, while our medium-term outlook on the pound remains bullish.
GBP/USD is currently above 1.3920. EUR/GBP is down slightly, with the exchange rate above 0.8680. The pound is up against the Australian dollar and flat against the Canadian dollar. GBP/AUD is currently above 1.8450, while GBP/CAD is above 1.7930.
Looking at this week’s economic data from the United Kingdom, traders will be watching upcoming Q1 GDP growth figures. Public sector borrowing figures for March (-£0.262b vs. £1.600b expected) beat expectations. YoY Nationwide housing price growth for April (2.6%) met expectations. Later today, the most important day, we’ll get Q1 GDP growth. We’ll also see GfK consumer confidence for April. Last week, March inflation figures were below estimates while Governor Mark Carney downplayed the possibility of a rate hike in May.
As the pound weakens, we are now bearish on the currency in the short-term. The pound is now trading within normal conditions. This is based on various technical indicators on a daily chart.
As the pound loses steam, we are now neutral on the currency in the medium-term. The pound is now trading within normal conditions. This is based on a range of technical indicators looking at a weekly chart.