The Great Britain pound has shown signs of weakness last week even though at first it looked like the currency is going to rally to new highs. What important events are scheduled this week and what analysts expect from sterling?
There are two major events in the United Kingdom this week: the release of manufacturing production data and the Bank of England policy meeting. Experts estimated ahead of the government report that manufacturing production expanded 0.3 percent in August after growing 0.2 percent in July. It is widely believed that the BoE will leave its monetary policy unchanged. Governor Mark Carney said that no additional stimulus is required, but at the same time it is early to remove the accommodative measures that are already in place. The central bank usually does not issue a detailed statement when it keeps policy the same, but if there are any comments from the policy makers, they will likely affect the currency significantly.
Of course, the most important factor that is influencing the Forex market has nothing to do with Britain but with the United States. The US government remains in the state of a shutdown and this is not good, especially as the deadline for raising the debt limit is nearing. Any speculations about the situation can affect the market in an unpredictable way. Additionally, if the shutdown ends, a stream of macroeconomic data that was delayed due to closure of government agencies will be thrown at traders.
The sterling was showing signs of weakness last trading week, but the currency has recovered a bit at the start of this week. Does this mean that the pound is ready for a new rally? Unfortunately for the currency, analysts are bearish. Both Forex Crunch and DailyFX think that the previous rally was overextended and the sterling is likely to correct even more.
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