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The Cable was the most positive currency pair during the last trading week. The pair started a new week at 1.541 and the Pound showed a negative tendency just after the market was opened. The GBP/USD was strongly affected by UK inflation data which turned to be negative again in September. According to the Office for National Statistics, the consumer price index fell by 0.1% in September from a year earlier, after a flat reading in August. Meanwhile, the weak inflation data is questioning expectations for higher interest rates from the Bank of England. However, the next day, the Sterling extended gains after data showing that the UK unemployment rate fell to a new seven-year low and wage growth continued to outpace inflation. The jobless rate ticked down to 5.4% in the three months to August from 5.5% in the preceding three-month period. It was the lowest unemployment rate since the second quarter of 2008.
As predicted by traders, the GBP/USD may close around the 1.538 level this Friday. As Reloaded expects, "The Cable just reached the daily upper channel line and some reaction at this level is to be expected. The overall down trend seems to have been exhausted for now, yet the market looks like it needs to consolidate at this levels for a while." Jignesh supports this view, suggesting that "The US dollar saw a late week push higher with bulls stepping in to create two positive days after a stretch of selling. The GBP has not seen much benefit of USD Strength and this is likely to continue this week. The USD may show additional strength, but the expectation is for the GBP to move lower quite marginally."
This week is considered to bring some important statistical data, including the release of data on public sector net borrowing and figures on retail sales.
Market participants can pay attention to the BoE interest rate decision and asset purchase facility volumes on Thursday, while consumer inflation expectations will be released the next day. In addition, the UK Chancellor of Exchequer George Osborne is preparing to deliver his Autumn Statement on Wednesday. US statistics, in turn, is likely to show the non-farm payrolls and the unemployment rate on Friday.