GBP/USD back above 1.4000 again after a brief dip below the figure level
The 30 January low of 1.3980 is the level to watch for any downside move in the pair, and the low today hugged near 1.3990 before bouncing back up again. The support level helped to stall downside moves earlier this month, and will prove to be a battleground for the time being between buyers and sellers.
A break of the level opens up a move towards the 100-day MA (red line) @ 1.3851.
But what are the risk events to look out for after last week's slew of UK data?
We saw wages data disappoint, inflation figures dwindling further, and a big miss on retail sales. All of that put together now sees the OIS market pricing in a 42.8% chance of a May rate hike by the BOE. It was above 95% heading into the data releases last week.
That's a massive turnaround in sentiment.
While we won't have the same kind of data points this week for sterling, the key development to look out for is in terms of Brexit. UK PM May is now likely to be forced to accept staying in the EU's customs union - as it looks ever certain the House of Commons will vote against her plans to withdraw from it.
That throws more uncertainty and political risk back into the picture, and that's not good for the pound. The Commons vote could take place early next month, so expect Brexit sentiment to weigh on the pound until this clears out.
The only saving grace which I can see for sterling this week is that we have a host of BOE speakers on the agenda.
If there is ever a time for the BOE to prime the market on a May rate hike, this would be it.
