Pound sterling is currently lower against all major currencies. The pound is currently the weakest against the euro and the Australian dollar. Yesterday, the currency ended the day flat against the US dollar and was slightly higher against the euro. Thanks to a relatively light economic calendar this week, the currency is mostly moving as a result of Brexit-related developments.
Turning to the latest news, Theresa May denied a news report in yesterday's edition of the Telegraph. The Telegraph suggested that May was considering joining the customs union following Brexit. Instead, a government source said that the country would consider implementing the EU's tariffs beyond 2020 in order to avoid a hard border with Ireland. May has reiterated that the UK's goal is to leave the customs union following Brexit and independently pursue international trade arrangements. The pound fell on the news yesterday and remains weak. While there are no significant developments relating to the currency today, traders continue to sell sterling. Our short-term and medium-term outlook on the pound is bearish.
GBP/USD is currently above 1.350. EUR/GBP is up, with the exchange rate above 0.8740. The pound is down slightly against the Australian dollar and flat against the Canadian dollar. GBP/AUD is currently above 1.7970, while GBP/CAD is above 1.730.
Following last week’s BoE interest rate decision, this is a light week for the British pound economic calendar. YoY wage growth excluding bonus (2.9%) and the unemployment rate (4.2%) met expectations. The claimant count (31.2k vs. 7.8k expected) was worse than expectations. Later today, we'll hear a speech by MPC member Haldane. Last week, the Bank of England surprised pound traders by outlining a weak forecast for growth and inflation this year.
As the pound trades lower, we are now bearish 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.