The technical context on remains slightly complicated, but from our point of view the formation of a structure with potential TARGET above 145 is still possible. That said, we will follow the pair during the next 1-2 sessions to understand if the swing shown on will be correct. If we also look at the analysis, we see that the net long positions have slightly increased (+4k).
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It’s a busy week ahead on the economic calendar. Key stats include employment and wage growth figures due out on Tuesday and retail sales figures due out on Thursday.
We saw last month’s employment figures temper market expectations of a BoE rate cut, which leaves the Pound exposed to this month’s numbers. Off the back of labor market numbers, January inflation figures are due out on Wednesday that will also influence sentiment towards monetary policy. Forecasts are for an uptick in inflationary pressure that should further ease expectations of a near-term rate cut. Much will depend on employment and retail sales figures, however.
The retail sales figures will likely be the key driver on the data front. A bounce back in spending would support the BoE’s initial outlook on economic growth following Brexit.
While there may be no progress with the EU, progress elsewhere is a must early on.