The pound was able able to count on some rather supportive data-flow this last week, as wage growth, inflation and retail sales all accelerated in January. Nevertheless, economists at ING believe that GBP/USD could challenge the 1.35 level on dollar strength.

Data to remain benign

“We expect a bounce in PMIs to endorse the good growth momentum for the UK economy. Markets will also keep a close eye on a number of BoE speakers including Governor Bailey (who testifies to the Parliament’s Treasury committee) and Chief Economist Pill.”

“Domestic factors are offering some shield to GBP, which is pricing in very little geopolitical risk.”

“While we expect the pound to face less downside risks compared to the euro in the week ahead, USD strength could push cable back to test 1.3500.”