There are no new data releases to end the week today which is likely to mean a fairly quiet end to the week. The GBP/EUR rate sits just above the 1.10 level and next week there is a possibility in my opinion that the rate could move back towards the 1.12 level.
The latest Consumer Price Index will be released next week, which I think will be up from the previous reading of 2.6%. CPI which is a key indicator for inflation is one of the last hopes for Sterling strength. If inflation rises over the next few months then the Bank of England may be forced into a interest rate hike. Over the last few months members of the Central Bank have talked down the chances of a hike, but if inflation rises above 3% they’re hand may be forced.
Next week there will also be a magnitude of EU data and other releases for the UK, which will guarantee plenty of volatility. However Tuesday will be the main day to look out for with the inflation data release. If the data is positive I believe Sterling could gain some momentum helping the rate moves above 1.11 and back towards the 1.12 region, this would be a 2 week high if it happened.
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