- British Pound shows important risk of reversal
- Solid Q2 UK economic growth figures encouraging for GBP
Upcoming UK CPI data could drive important volatility in the
British currency. Analysts expect that the numbers will show inflation
remained below the Bank of England’s official target, and indeed low
price pressures have limited expectations of future BoE interest rate
hikes. And indeed the bank’s recent Quarterly Inflation Report forced
an important GBP sell-off as officials talked down the likelihood of
tightening policy through the foreseeable future. Expectations have fallen so much that any higher-than-expected CPI
inflation figures could spark an important GBP bounce. The subsequent BoE minutes and Retail Sales figures are less likely to move markets but remain worth watching for potential surprises. 
We thus head into a potentially pivotal period for the fast-falling
British currency, and we have to go back to the heights of the global
financial crisis in 2008 to find when the GBPUSD last fell for seven
consecutive weeks. This fact in itself hardly guarantees that the
Sterling could finally reverse, but we have seen concrete signs it may have set an important low through recent trading.
