The British Pound Sterling to Dollar exchange rate on Monday, December 12, soared, however a mix of technical signals and fundamental risks should keep the rate contained within familiar territory.
The British pound GBPUSD, +0.0158% rose to $1.2677 late Monday in New York, compared with $1.2574 late Friday in New York. Investors expect several U.K. data releases and policy meeting from Bank of England this week, including the latest print on inflation, employment, and retail sales. The central bank is largely expected to leave rates unchanged.
A strong start to the week for Pound Sterling sees it bounce against the US Dollar. The US Dollar is struggling against a host of major currencies as markets pare recent gains against the much-anticipated US Federal Reserve meeting due mid-week.
“The Dollar fell prey to cautious profit-taking,” says Piet Lammens at KBC Markets in Brussels. “Investors apparently are turning a bit more cautious on the Dollar ahead of the Fed policy decision.”
The Bank of England (BOE) interest rate meeting on Thursday, December 14 at 12.00 (GMT) is the main economic data event in the week ahead, and although no change of policy is expected the minutes, released immediately afterward, could be instructive in showing members thinking on future policy.
On Wednesday, December 14 at 09.30 the ONS release unemployment data, which is forecast to show a 4.8% unemployment rate (Oct), a 5k rise in the Claimant Count (Nov) and Average Earnings Including Bonuses (Oct) rising by 2.3%.
On Thursday, December 14 at 09.30 Retail Sales in November is released and expected to come out at 0.2% month-on-month.
If these data remain robust then Sterling should be able to enjoy the fundamental support required to keep its recent recovery move in place.
