Despite weaker economic data, the British pound appears to be headed for a test of 2.0.
According to the CBI Distributive Trades survey, consumer spending slowed in the month of January but that did not lead to a sustained sell-off in the British pound. The main reason is because it is not significant enough to convince the Bank of England to lower interest rates again next month. According to a special technical analysis report that we published last week, after falling nearly 2,000 pips from the November high, the current rally that is underway could take the British pound up to at least 2.01. There are a few pieces of housing market data due for release tomorrow. Given that housing is one of the most vulnerable aspects of the UK economy, the data is not expected to be pound bullish.