- The British Pound has held its ground in recent days even though there has been no Brexit breakthrough and PM May’s grip on power seems increasingly tenuous.
- That suggests a lack of interest in selling the currency and if the bad news is now in the price it could even rally.
- Much will depend, though, on the economy – and the week is packed with important data and speakers.
Fundamental Forecast for GBP: Neutral
Despite the Brexit negotiations between the UK and the EU seemingly making little progress, and UK Prime Minister Theresa May losing two members of her cabinet already this month, the British Pound has been remarkably stable.
After falling sharply on November 2, after the Bank of England’s “dovish hike” in interest rates, GBPUSD has recovered most of the lost ground.
Chart: GBPUSD One-Hour Timeframe (November 1 – 10, 2017)
Chart: EURGBP One-Hour Timeframe (November 1 – 10)
Against such an unpromising background, the Pound’s ability to roll with the punches has been impressive. Moreover, unless the Brexit talks break down completely, the Prime Minister is forced out of office or the Bank of England turns even more dovish, it is hard to see where any more bad news could come from.
This all suggests that the Pound could rise further but caution is called for during the most important week of the month for UK economic data. First, on Tuesday, are the inflation figures for October, which are expected to show a small rise to 3.1% from 3.0% in the year/year rate. The day after, labor-market data could show an increase in the claimant-count measure of unemployment last month, and October’s retail sales numbers, due Thursday, were probably almost flat month/month and down year/year.
In addition, several Bank of England policymakers are speaking Thursday so erring on the side of caution is probably the best course of action.
--- Written by Martin Essex, Analyst and Editor
To contact Martin, email him at email@example.com
Follow Martin on Twitter @MartinSEssex
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