After selling off throughout the past week, the British pound shrugged off softer producer prices to hold steadily above the psychologically important 2.0 level. Comments from Bank of England officials suggest that even though price pressures have fallen in the month of June, the inflation risk remains to the upside.
Even the typically dovish Blanchflower chimed in on the high level of money supply growth. The Bank of England clearly sees this as a temporary slowdown and not a permanent one. This attitude suggests that the minutes from last week?s monetary policy meeting should reveal continued hawkishness. Retail sales, the trade balance and leading indicators are all due for release on Tuesday along with comments from Bank of England policy member Sentence. Expect more action in the GBP/USD.