Last week was thrown off guard due to the Prime Minister announcing she would not trigger Article 50 until the end of the month. Many investors responded by selling off the pound and driving the price lower and lower, settling at an 8 week low against major currencies. Amongst the uncertainty, the one event that did go as planned was the Fed interest rate hike on Wednesday evening, but due to the Fed not being as bullish as previously expected we saw the GBP/USD exchange rate rise after this news by around 2%.
The Bank of England also had one of its members change their stance on monetary policy this week as we saw the vote 8-1 for a rate hike for the first time in around a year. Investors have run with this information as if an interest rate could happen as early as next month (which it won't). In fact, it is unlikely that we will see any change in monetary policy until the end of 2017 at the earliest. Inflation is growing at a rapid pace in the UK, and unfortunately, wages are still stagnated, so an interest rate would be wise at some point to curb the UK's inflation levels.
Staying on the topic of inflation, the UK will release its CPI figures on Tuesday morning, and these figures should show another rise in inflation levels over the last month. As mentioned above, inflation will begin to become a concern soon as goods are becoming more expensive in the UK, but wages are not growing alongside this which will begin to put a strain on the economy.
The next important data release for the UK will be retail sales figures on Thursday, you may remember that last month, UK retail sales figures were very low, so the positive news is that the only way was up for this month and a stronger figure is expected this week, and this news should help boost the pound.
Though we are expecting some positivity for the pound this week, Article 50 is still on the horizon at the end of this month and the market consensus is still that the pound will drop off. However, this isn't guaranteed. I would keep this in mind when planning a currency transaction over the next couple of weeks.