The British pound is going to encounter a series of tests in the days ahead
It's going to be a real test of nerves for sterling traders this week as the agenda is jam packed with risk events. Here's a look at the key events ahead this week:
20/3, Tuesday
- UK February CPI data
21/3, Wednesday
- UK labour market report
22/3, Thursday
- UK February retail sales data
- BOE monetary policy meeting and rate decision
- EU Summit - discussion on Brexit
You can pretty much classify the first three under one blanket risk which is the consumer. Core inflation is expected to slow down to 2.5%, which will help to alleviate the strain faced by consumers in the UK due to a lack of wage growth coupled with high inflation.
On the labour market report, wages will be the key one to watch with regards to that. And to cap things off, we'll have the retail sales data - which is also expected to show a decline compared to prior readings. The core retail sales figure is expected at 1.2% y/y compared with the 1.5% y/y prior.
Following that, we have the Bank of England meeting and though no rate changes is expected - the language is one to watch as the market is priming for a rate hike in May.
At the same time, there is Brexit risk going on as well with the EU Summit taking place. Officials will be discussing on Brexit and will be somewhat expected to sign the transitional agreement then and there.
But it still all boils down to the question of the Irish border, and EU officials will require some satisfactory solution or proposal from the UK on the matter. If that stalls, the Brexit transitional agreement could be in jeopardy and that will weigh on sterling sentiment surely.
On that note, look out for the EU press conference on Brexit at 1145 GMT - which was just announced earlier here.
