Things seem to be turnin’ up for the British pound as economic data came in stronger than expected and lawmakers are blocking a “no deal” Brexit. Can sterling hold on to its gains this week?
U.K. inflation figures (Sept. 18, 8:30 am GMT)
The spotlight could turn back to economic data this week as the U.K. economy is scheduled to release its CPI report on Wednesday’s London session.
The headline figure is expected to have fallen from 2.1% to 1.8% in August while the core version of the report likely dipped from 1.9% to 1.8%. Underlying inflation figures are also slated to show declines, with producer input prices expected to print a 0.4% drop and output prices to slow from 0.3% to 0.1%.
However, if last week’s economic figures are any indication, it’s that upside surprises are likely. In that case, pound pairs might be able to find another reason to rally as strong data suggests that Brits are keeping calm and carrying on despite Brexit uncertainties.
BOE policy statement & MPC minutes (Sept. 19, 11:00 am GMT)
An even bigger market event in the form of the BOE monetary policy decision is lined up on Thursday’s London session. At the same time, the central bank will also be releasing the minutes of its pow-wow, revealing whether or not policymakers are shifting their stances.
No actual changes to interest rates or asset purchases are expected this time, though, as the central bank’s decision mostly hinges on how the Brexit situation might turn out.
With that, most analysts think that this week’s BOE statement might be a non-event, unless of course there is a major change in rhetoric. Some predict that head honcho Carney might share a more optimistic outlook as U.K. lawmakers push to avoid a “no deal” Brexit in October.
There was no shortage of plot twists in the latest episodes of the Brexit drama as PM Johnson seems to be facing a losing battle to get the U.K. out of the EU by the October 31 deadline.
One major event to watch out for is the Supreme Court ruling on Tuesday, during which it would announce its decision on the High Court appeal against prorogation.
You see, No. 10 has been trying to suspend parliament in order to prevent lawmakers from blocking Brexit from happening next month. He even got the Queen to give the thumbs-up on this move, but both the Scottish court and the U.K. High Court aren’t having it.
If the Supreme Court rules against prorogation, the plot would thicken as this scenario gives MPs more time to scheme, possibly upping the pressure on PM Johnson to ask for a deadline extension or even pushing for a general election.
In any case, it appears that stronger odds of delaying or even blocking Brexit have been bullish for the British pound, even if this brings more political and economic uncertainty down the line.
Missed last week’s price action? Read the GBP price recap for September 9-13!