The GBPUSD ended the week at $1.37262 following a strong surge on Friday, prompted by a report which indicated a softer Brexit landing was favoured by some of the major European players. This is the highest the British Pound had attained since June 24, 2016, when the Pound took a hit after the Brexit vote. Reports from Bloomberg indicate that Spain and the Netherlands are in favour of easing some of the Brexit conditions for the UK.
The British Pound is also being pushed by expectations of an interest rate increase after years of a nascent monetary policy. For this week, not much is coming regarding news releases from the UK, except for the UK Consumer Price Index (y/y) report. The consensus is for inflation to drop by a basis point to 3.0%. If the actual news number is in line with the expected number, then the recent bullishness experienced by the British Pound against the US Dollar may be halted, even if temporarily. This will also defeat a case for the Bank of England to tighten its monetary policy. Retail sales are also due to be released on Friday, January 19, with an expectation that the numbers will weaken from 1.1% to -0.8%. If these two data come out as expected, then the GBP may weaken in the short term. Long-term perception for the cable will still be dominated by the fallout of the Brexit negotiations.
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