The GBP/USD price will be in the spotlight this year as Brexit challenges remain. The pair will also be watched as the UK’s Office of National Statistics (ONS) is set to publish key economic data. The pair is trading at 1.3417, which is close to its lowest level in December last year.
Brexit and UK data dump
The Brexit deal signed by Boris Johnson almost a year ago has come back to haunt the country. The UK has asked the European Union to restart negotiations about the Northern Ireland situation.
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In a statement during the weekend, UK’s Brexit minister said that the situation could see the country trigger Article 16. This simply means that the UK will be at liberty of adding tariffs to goods from the European Union. The EU, on the other hand, will retaliate against the UK, which will be negative for the GBP/USD pair.
The GBP/USD pair will also be in focus because of a key data dump from the UK and the US. The numbers will start coming out on Tuesday when the ONS will publish the latest employment numbers,
Analysts expect that the data will show that the country’s unemployment rate declined to 4.5% in September while wages kept rising.
These numbers will be followed by the latest UK inflation data that will come out on Wednesday. The data is expected to show that the headline and core consumer price index jumped sharply in October. Precisely, analysts expect that the country’s inflation jumped by more than 4% as energy prices jumped.
Recently, the UK has endured a prolonged period of fuel shortage and higher gas prices. Sadly, with tensions between Russia and Europe rising, there is a likelihood that these prices will keep rising.
UK and US retail sales
The GBP/USD pair will also react to the latest UK and US retail sales data. The US will publish its sales on Wednesday. Analysts polled by Reuters expect the data to show that sales remained steady even as US inflation soars. Besides, the US unemployment rate has fallen while wage growth is strong.
The ONS will publish the latest UK retail sales numbers on Thursday. These sales are expected to show that the country’s sales rose by about 0.4% on a month-on-month basis while core sales rose by 0.3%.
Therefore, after the spectacular decline in the past few weeks, there is a possibility that the GBPUSD pair will have a relief rally this week.
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