Sterling traders are preparing for a busy week ahead, there is a data heavy week scheduled with three major statistical updates due, while on the geopolitical front the country welcomed a new Prime Minister and his Chancellor of the Exchequer. However, traders are expecting to see greater impact in the short term from the fundamentals with key employment data, CPI numbers, and Retail Sales figures on the final trading day of the week all due out, with the key inflation update likely to have the biggest impact.
Inflation data has been extremely volatile this year as inflationary pressures from surging energy prices has contributed to large increases, and while this month’s data is set to pull back in, there are fears that the escalating conflict in the Middle East could see future months numbers pop back up again, therefore this print takes on probably more importance than it may have done just a couple of weeks ago. The market is expecting the year-on-year number to have dropped 0.1% from 2.8% to 2.7% and anything away from that is likely to see big moves in the pound.
Cable is positioned nicely for the market to move in either direction, and traders are anticipating good opportunities around the data release. Anything higher than expected should combine with recent increased inflationary concerns to see rate hike expectations increase and cable to rally strongly, while a weaker than expected print should see the pound fall.
Resistance 2: 1.3658 – May High
Resistance 1: 1.3544 – Trendline Resistance
Support 1: 1.3399 – 200 Day Moving Average
Support 2: 1.3196 – Trendline Support
