This Week: GBPUSD trading above 21-SMA ahead of UK CPI & Jobs reading

The British Pound has been the smallest loser so far this year against the US dollar, with GBPUSD shedding less than 1%.

Scheduled events and data releases on the economic calendar this week could have a major say on whether Sterling can retain top spot among its G10 peers.

Bloomberg’s FX model predicts a 74.5% chance that GBPUSD will trade between the 1.2588 – 1.2861 range this week.

Traders and investors will be sizing up each data release to inform them as to the Bank of England’s (BOE) interest rate outlook for this year.

Events Watchlist
 

• Tuesday, January 16: UK November unemployment, December jobless claims

Despite the GDP rebound in November, markets are still mindful that the UK economy may see a technical recession. If the incoming UK jobs data adds to the gloom, that could drag GBPUSD below its 21-day simple moving average (SMA) and into sub-1.2700 waters.
 

• Wednesday, January 17: UK December CPI

Economists forecast that UK consumer price index (CPI) would ease lower: December’s headline and core CPIs  to ease lower to 3.8% and 4.9% respectively – both slightly lower than November’s year-on-year figures. However, higher-than-expected inflation that hinders the BOE from lowering rates to support the UK economy, may help boost GBPUSD towards 1.2800.
 

• Friday, January 19: UK December retail sales

Noting the existing fears surrounding the UK economy, December’s retail sales are expected to have shrunk by 0.5% compared to November (month-on-month). Further evidence of a worsening UK economy, which in turn hastens BOE rate cuts, could weigh on Sterling and potentially bring GBPUSD closer to its 50-day SMA by then.

Here’s comprehensive list of other key economic data and events due this week:

Monday, January 15

• AUD: Australia December inflation
• EUR: Germany 2023 GDP; Eurozone November industrial production
• US markets closed
   

Tuesday, January 16

• AUD: Australia January consumer confidence
• EUR: Germany January ZEW survey; December CPI (final)
• GBP: UK November unemployment; December jobless claims
• CAD: Canada December CPI
• SPX500_m: Goldman Sachs, Morgan Stanley earnings
• USD: Speech by Fed Governor Christopher Waller
   

Wednesday, January 17

• CNH: China 4Q GDP; December industrial production, retail sales
• EUR: Eurozone December CPI (final)
• GBP: UK December CPI
• Crude oil: EIA crude oil inventory report
• USD: Fed Beige Book; speech by New York Fed President John Williams; US December retail sales, industrial production
   

Thursday, January 18

• AUD: Australia December unemployment
• JPY: Japan November industrial production (final)
• EUR: ECB meeting minutes; ECB President Christine Lagarde speaks at Davos
• USD: US weekly initial jobless claims; speech by Atlanta Fed President Raphael Bostic
   

Friday, January 19

• JPY: Japan December national CPI
• EUR: Germany December PPI
• GBP: UK December retail sales
• CAD: Canada November retail sales
• USD: US January consumer sentiment; speech by San Francisco Fed President Mary Daly