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May 17 - 10:55 AM

Credit Agricole: GBP/USD Outlook for the Coming Week

By eFXdata  —  May 17 - 09:30 AM

Synopsis:

Credit Agricole discusses the outlook for the British Pound (GBP) against the US Dollar (USD) with the upcoming week's busy UK economic calendar, which includes May PMIs, April CPI, and retail sales data. Additionally, speeches by key Bank of England (BoE) officials will be closely monitored.

Key Points:

  • Economic Data: A packed schedule with May PMIs and key indicators such as April CPI and retail sales, which could provide deeper insights into the UK's economic health.
  • BoE Influences: Speeches by BoE Governor Andrew Bailey and other officials like Sarah Breeden and Huw Pill could impact market expectations regarding monetary policy.
  • Impact of Data on Monetary Policy: The April CPI data will be particularly scrutinized; a significantly higher-than-expected inflation rate could prompt a reassessment of the BoE's current easing trajectory and influence GBP valuation.

Conclusion:

GBP/USD movements in the coming week will likely hinge on signs of sustained improvement in the UK's economic recovery. A halt in the repricing of BoE rate cuts could bolster the pound, particularly if the economic data exceeds expectations. However, only a substantial deviation in CPI from forecasts is expected to meaningfully alter the current monetary policy outlook and, by extension, affect GBP trading dynamics.

Source:
Crédit Agricole Research/Market Commentary

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