This week's inflation data may lead to a significant pullback for the recently strong British pound.

　　After surging nearly 2% against the dollar last week and breaking through the key 120-day and 200-day moving averages on a weekly basis, the pound unexpectedly pulled back on Friday, extending the day's losses, with some agencies warning that the pair could be facing a major pullback, and inflation data due this week could be the trigger - as it has consistently exceeded expectations in recent months. If the data released this week unexpectedly slows sharply, the things that have supported the recent strength of the pound will be lost.

　　David Adams, head of G-10 FX strategy at Morgan Stanley in London, said: "Even if interest rates rise, higher UK (GBR) inflation coupled with weaker growth is not necessarily positive for sterling." We expect the euro to rise 6% against the pound by mid-2024."

　　Carlos Fernandez Ayler, head of global FX and emerging markets macro trading at Bank of America, said: "We are starting to see the hedge fund community consider switching to short sterling because it is facing a number of headwinds. But we all got the trend in sterling wrong earlier this year, so we'll see."

　　Goldman Sachs currency strategist Michael Cahill said that even if Wednesday's data showed inflation starting to fall back, it remained at 1980s levels, which would require the Bank of England (BoE) to keep raising interest rates. I expect GBP/USD to rise by around 1.4% to 1.33 in 12 months 'time. "The UK has the highest nominal interest rate in the G-10, but the lowest real interest rate in the G-10. Inflation and wage growth in the country remain very strong. That clearly calls for tightening, which is positive for sterling."