GBP Weekly Forecast

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PM speech​

Brexit episodes are off to a running start this week as No. 10 is due to give a speech urging parliament to “not break faith with the British people” by supporting the transition deal and dropping calls for a second referendum.


Recall that PM has been busy seeking reassurances from EU leaders regarding the backstop proposal – something that has drawn a lot of opposition from hardcore Brexiteers and led her to call off the “meaningful vote” last week.

However, sources are reporting little to no evidence of actual clarifications from EU officials either, which doesn’t make job any easier. Hold on to your tea, fellas!

U.K. inflation figures​

Another batch of inflation figures are due this week and this usually provides some guidance on the BOE’s monetary policy bias. But with all eyes and ears on Brexit these days, pound traders might not bat an eyelash with the CPI results.
Headline inflation is slated to dip from 2.4% to 2.3% likely due to weaker oil prices in the previous month while the core reading could also dip from 1.9% to 1.8%.

Producer input prices could post a hefty 2.8% slide after the earlier 0.8% uptick while producer output prices might see a 0.1% drop. The house price index could also fall from 3.5% to 3.3% while the RPI could drop a notch from 3.3% to 3.2%.

U.K. retail sales​

Next up in terms of top-tier data, we’ve got the retail sales report which should provide an inkling of how overall growth figures might turn out. After all, consumer spending accounts for a huge chunk of GDP and also acts as a leading indicator for business production.


U.K. retail sales might post a 0.3% uptick after the earlier 0.5% decline in possibly on account of holiday shopping sprees. However, weaker than expected results or another decline could lead traders to pare BOE tightening hopes, especially with Brexit posing more uncertainties.

BOE decision and MPC minutes​

The reaction to the retail sales report might be limited since a bigger event in the form of the BOE monetary policy statement is due just hours later. No actual changes to interest rates or asset purchases are eyed, but traders are likely to pay close attention to how policymakers weigh in on Brexit developments.

Increased focus on “no deal” preparations could remind traders of how much damage this scenario could cause on the U.K. economy, especially after the BOE already released their forecasts on various potential outcomes.

 

[Genie]

However, sources are reporting little to no evidence of actual clarifications from EU officials either, which doesn’t make job any easier. Hold on to your tea, fellas!