Credit Agricole CIB FX Strategy Research notes that GBP ended the week on a firmer footing mainly in reaction to this week’s UK labor data along with weaker than expected US data.
Looking ahead, CACIB notes that GBP investors’ main focus will turn to the releases of the UK June retail sales and CPI.
“Any indication of domestic demand conditions having held up better than feared may provide additional support to inflation expectations. More importantly such a development would signal rising domestically driven upside risks to inflation, and this could therefore drive investors’ central bank rate expectations and the currency higher.
However, we stick to the view that intact downside risks to growth should prevent the BoE from considering higher rates this year, ” CACIB argues.
Strategy-wise, CACIB expects GBP/USD to remain in broad-range and recommends selling rallies into the top of that range.
Source: Credit Agricole CIB Research
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