Huge week for UK data
Sterling traders will be keeping their powder dry on Monday. We have no significant UK data due for release but we will have a speech from the Governor of the Bank of England at 6pm and Andrew Bailey can be interesting to listen to. However, we can probably pre-write his speech for him. It will be along the lines of, inflation is too high, interest rates need to remain high to control inflation and the bank hasn’t made a decision yet as to when they’ll start lowering the cost of borrowing. Things start to heat up for the pound as from Tuesday morning when we will see UK unemployment data. The data keeps on coming through the week; Wednesday delivers consumer price inflation, Thursday will see the release of the gross domestic product data for the fourth quarter of last year and Friday will complete the week with retail sales data. In general, the forecasts are relatively positive. There is a suggestion that inflation may have risen slightly in January which really does add to the Bank of England’s dilemma over interest rates. There is every reason to suspect Sterling will be quite well-supported this week. However, as we have seen in recent weeks, any increases in the value of the pound will meet with significant sterling selling interest and that tends to cap any rise in the GBP/USD rate to $1.2750 and any rise in the GBP/EUR rate to €1.1765. At that level, one euro buys £0.85.