The most important data announcement of the week will be on tomorrow at 0.930am. We will see the release of inflation data for the UK an due to Brexit this could be very influential on the currency market due to what looks like the necessity for a hard brexit. There has already been wide spread media coverage of the Unilever – Tesco situation. Where Unilever were going to up there prices on house hold goods and Tesco removed some items from their shelves,. this situation has now been resolved, but be aware this could be an issue in other forms of trade later down the road.
I would expect a small increase, but if the data comes in higher than expected then Sterling could suffer. It seems a strange scenario considering inflation would have been seen as positive pre-brexit.
There is the Bank of Canada’s interest rate decision on Wednesday at 3pm but I would be surprised if there was any movement, I think it will most likely be a non-event. With Putin’s recent announcement he would be capping oil production we have seen oil and the Canadian dollar rise in value. Oil being Canada’s main raw material export.
I think in order to see a significant rally for Sterling we will need to see decisive action in regards to trade negotiations with its counterparts. Francois Hollande and Jean Paul Junker have said they are not willing to negotiate until article 50 is triggered. Theresa May has stated that this will occur before the end of March 2017.
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