The pound has been a strong performer of late and the 1.40 level is in focus from both a technical and fundamental point of view.
As expected, last week’s data flow out of the UK was once again supportive for the pound.
Solid retail sales, strong PMIs and rising inflation have all endorsed the strong recovery narrative for the nation and its currency.
While this week’s calendar will be very quiet with no Bank of England officials scheduled to speak either, the market might wish to pay particular attention to comments from the Bank of England’s deputy governor, Ben Broadbents comments with the Telegraph from the weekend: Get set for ‘very rapid’ recovery, says Bank of England’s Broadbent.
He said that he sees “very rapid growth at least over the next couple of quarters” particularly as the economy will be boosted by people simply saving less, Broadbent said in remarks published Saturday evening in the Telegraph newspaper.
Broadbent said that there has been “less of a disinflationary effect” as households have also switched spending into other areas.
“The price rises for those hitting capacity limits are going to be bigger than the falls in prices for those seeing falls in demand”, he said in an interview with the newspaper.
The weeks ahead, 1.4000 eyed
Meanwhile, with the UK recently relaxing containment measures put in place to slow covid cases rising, the weeks ahead will be a big test for the nation the effectiveness of the country’s vaccination programme.
From a technical perspective, bulls will be looking for another test of the 1.4000 psychological level after failing to break it last week.
A bearish dollar outcome from the Federal Open Market Committee meeting could be just the ticket that the bulls were looking for.