British pound gained despite mixed data
The British pound (FXB) appreciated 1.5% against the US dollar (UUP) for the week ending February 16. The pound (GBB) closed for the week at 1.40 as compared to 1.38 in the previous week. The major reason for the appreciation was the US dollar’s weakness in the forex markets. Economic data reported from the UK in the previous week indicated that inflation remained higher at 3% in January and retail sales growth dropped to 0.1% as compared to the market expectation of 0.5%. There were no new developments in the Brexit negotiations. British equity markets (BWX) rebounded, which was in line with global markets. The FTSE 100 Index (EWU) was up 2.9% in the week ending February 16 and closed at 7,294.7.
Speculators reduce bullish positions
As per the Chicago Futures Trading Commission’s (or CFTC) latest “Commitment of Traders” report, released on February 16, speculators have trimmed their overall bullish positions by 12,927 contracts in the previous week. The total outstanding net long contracts were reduced from 27,867 contracts to 14,940 contracts in the week before.
Week ahead for the British pound
This week will see several economic data releases for the British economy. Key data releases scheduled to be reported this week include UK employment reports, an inflation report hearing, and 4Q17 GDP. Bank of England Governor Mark Carney is scheduled to speak on Tuesday, and his view on UK interest could move the markets in either direction. Except for the hope of increasing interest rates, there’s likely no major reason for the pound to rally this week.