Last week, the GBP/USD pair – commonly known as the cable – was little changed. This came as the data on the US inflation missed analysts’ consensus and as the ongoing political problems in the UK continued. In the former, data from the labor department showed that the country’s consumer prices for April rose at a rate that was lower than expectations. On the latter, Theresa May’s problems continued as major disagreements within her cabinet came to the public domain. This places a major hindrance to her agenda on the customs union issue.
In the past one month, the pair has fallen from a high of 1.4376 to reach to a multi-monthly low of 1.3460. This decline has been compounded further by the weak economic data from the UK. This data has turned a hawkish Bank of England (BOE) into a dovish one. Traders don’t expect the bank to increase rates more than once this year. The expectations are for a one hike this year, and two more in the coming year.
This week, we will get the employment data from the UK. This data will be very important to traders and will likely influence the decision of the BOE and the sentiment among investors. This week, this is one pair to watch because the data and political happenings in the UK could easily change its trajectory.