- Derek Halpenny, head of global markets research at Bank of Tokyo-Mitsubishi UFJ Ltd.
The cable moved lower on Monday, easing back below the 1.67-mark, as the week ahead will offer a lot of incentives on both sides– from the U.K. and the U.S. to provide direction for one of the most traded currency pairs.
The week will be full of fresh catalysts, including Tuesday's CPI report, which is projected to show further decline in consumer prices, moving further below the 2% official target. Regarding the labour market, the employment data is expected to generate positive momentum in the cable, as companies will hire more staff even despite harsh winter conditions. On the one hand, strengthening in the nation's labour market will add more pressure on the Bank of England to start raising rates, while on the other, falling inflation provides more room for a manoeuvre.
Sooner or later the central bank will have to act, as domestic economy is picking up. Futures investors' bets the Sterling will rise against the greenback hitting a three-year high, as the U.K. property market is escalating speculation Carney will pull the trigger sooner-than-expected. Earlier this month the IMF has already raised its growth outlook for the U.K. The gap in the number of wagers by hedge funds on a climb in the Pound compared with those who expect a decline stood at 46,477– the highest since February 2011.
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