Last week we saw that GBP/USD broke above a key psychological level and touched its highest level since September 2016. This came after a bumper UK retail sales number despite some less-than-favourable data releases earlier in the week. Inflation pushed higher once again with the pace of wage growth unable to follow suit.
Looking to the week ahead, it’s a slightly quiet week on the data front, although in the current environment that doesn’t mean a lot. Who knows what the week will bring! On Tuesday, Bank of England Governor Mark Carney and various Monetary Policy Committee members will testify before the Treasury Select Committee. We don’t expect to see any major divergence from the quarterly inflation report at the beginning of the month. However, if any new information is released then the market will react accordingly.
The second release of the Quarter 1 (Q1) Gross Domestic Product (GDP) is released on Friday, and any revision could affect the way sterling trades. The ongoing political debate will no doubt continue as we approach the date of the UK general election.
On another note, be aware that there is a UK bank holiday next Monday. As a result, we could see more aggressive swings in the market as investors close out positions before the long weekend.