For GBP to move decisively higher this week, it will require not only reaching a Brexit transition deal but also a more positive trend emerging in the economy. The U.K.'s negotiators will be pushing the EU for a written promise of a transition deal which, if delivered, should give the pound a lift. For sterling to really generate some positive momentum, though, data this week will be key.
Most importantly, investors will be looking for signs that the trend of real wage contraction in Britain is abating. Additionally, sterling bulls will be hoping retail sales released ahead of the BOE rate announcement on Thursday will pick up from recent readings. While economists predict an uptick in February from the previous month, a significant beat is probably needed to show the worst is behind us.
Source: Bloomberg Pro Terminal
Jr Trader Alexander Kumanov
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