GBP/USD is set to close the week where it had started, around the low 1.26s, with the break below the bottom of the 7-8 week (1.26-1.28) range proving short-lived, in part due to dollar upside easing as market participants await a fresh catalyst.
Nonetheless, with the exception of cable, when looking at sterling crosses, the pound remains firm, EUR/GBP is hovering at multi-month lows and GBP/JPY is just shy of printing a fresh 9-year high.
Next week is huge in terms of UK specific event risk.
The latest inflation, labour market and GDP data is on the docket and while is on the low end, the data has the potential to move the needle for the Bank of England outlook.
The key focus is on UK CPI, where the consensus view is for an uptick in both the core and headline numbers.
More importantly, the BoE forecast services inflation to rise 0.2ppts to 6.6%.
Therefore, significant deviations from this will matter for policymakers.
Across the pond, there is also the U.S. inflation print, which will be noteworthy as to whether the hawkish repricing persists and by extension, keep the dollar on top.
That said, should UK data beat expectations, sterling upside against euro could be a better expression.
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