There is a busy week ahead for the Great Britain pound. There will be plenty of economic releases from the United Kingdom, but the most important event should the monetary policy meeting conducted by the Bank of England.
The meeting is scheduled for Thursday (September 15). Considering that the central bank has expanded its stimulus program to unprecedented levels in August, it is highly unlikely for the policy to be changed again so soon. Yet the bankâs statement will be important as it may provide interesting insights, including a response to accusations of the stimulus expansion being an unwarranted knee-jerk reaction to the Brexit. Plenty of economists questioned the necessity of additional stimulus in the light of recent reports that had shown resilience of the UK economy.
Talking about macroeconomic data, there are quite a few reports planned for the current trading week. Among the most important ones are CPI, employment, and retail sales reports. The Consumer Price Index is expected to show growth by 0.7% in August, a bit bigger than Julyâs 0.6%. Analysts predict that employment will show an increase of unemployment growth by 1,700 and slowdown of wage inflation from 2.4% to 2.1% (according to the 3-month moving average compared to the same period a year ago). As for retail sales, forecasts promise them to show a drop by 0.4% last month after the gain of 1.4% the month before.
While domestic fundamentals can impact the sterling, the currency is also likely to react to news from abroad. In particular, prospects for monetary tightening from the Federal Reserve and the resulting risk aversion may drive the pound down even if Britainâs data turn out to be helpful.
In light of all the considerations, analysts preferred to remain neutral on the pound, waiting for the word from UK policy makers. Forex Crunch said:
British numbers have been generally strong in the third quarter, despite fears of an economic backlash from the Brexit vote. Will the good news continue? In the US, there is a reasonable likelihood that the Fed will press the rate trigger in December, but a final decision will depend on key US numbers.
DailyFX was also neutral fundamentally but noted:
From a technical perspective, our forecast remains bullish as long as the GBP/USD holds above key support near the psychologically-significant $1.30 mark.
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