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GBP/USD has reacted positively to a leap in inflation after weak wage data beforehand. Brexit, coronavirus, and the Fed’s minutes are set to move cable as Yohay Elam from FXStreet notes.

Key quotes

“Another ‘buy the dip’ reaction has proved profitable for pound traders. GBP/USD has been on the rise after the Consumer Price Index jumped from 1.3% yearly to 1.8% in January – leaping over expectations, which stood at 1.6%. At around 1.3020, sterling is extending its gains.”

“Sterling also weathered rhetoric regarding Brexit. The EU continues insisting on regulatory alignment and playing by its rules in return for easy market access. On the other hand, the UK stressed that the whole point of Brexit was that Britain would be able to set its own rules. Many expect both sides to tone down when they enter official talks in March.” 

“Later in the day, the Federal Reserve’s Meeting Minutes release is set to shed some light on January’s decision. Back then, the Fed left interest rates unchanged and signaled a long pause. On the other hand, markets foresee a reduction in borrowing costs later this year.” 

“US Housing Starts and Building Permits are also of interest, and they will likely show that the construction sector remained robust in January.”