The Australian Dollar remains the best-performing currency in the G10 complex in 2017 with a strong desire amongst international investors looking to invest in the country's superior yielding money markets driving the currency higher.

The return of the carry trade has been observed as being one of the themese driving currencies at present, and as long as it persists we continue to believe fundamentals should continue benefiting the Aussie.

However nearer-term, the picture is actually somewhat in favour of GBP/AUD which we believe is forming a 'triangle pattern' as price action consolidates in between two narrowing lines.

If it is a triangle, then it is in the early stages of development and is likely to oscillate and extend a little longer before finishing and breaking out.

The pair has now almost fallen to the lower boundary of the triangle at 1.6100 and looks poised to rebound back up.

A break above the 1.6300 level would provide confirmation of such a rebound higher up to resistance at 1.6500 initially.

Data, Events for the Australian Dollar

The week starts with the release of the Reserve Bank of Australia’s (RBA’s) February meeting minutes at 00.30 GMT on Tuesday, February 21.

Later RBA Assistant Governor Lowe will be speaking at 21.30 so watch for some turbulence around this time, particularly if there is some expression of unease over the AUD's appreciation in 2017.

The Wage Price Index and Construction Index for Q4 are out at 00.30 on Wednesday.

They are both expected to beat previous results, with the former rising by 0.5% and the latter by 0.3% from -4.9% previously.

TD Securities see the Wage Price Index as important given the current obsession with inflation, with a below expectations result weighing on AUD.

“A benign labour market has pressed down on wages across all industries and we do not see a turnaround while hours worked are so weak. TD and mkt +0.5%/qtr and +1.9%/yr, so a fresh record low of +1.8%/yr or below will spark inflammatory media commentary and weigh on the AUD and short bond yields,” said a TD Securities note seen by PSL.

Data, Events for the Pound: Politics to the Fore Again

From a hard data perspective, the week kicks off with the CBI Industrial Trends Survey in February on Monday at 11.00 GMT, which is supposed to produce a 3 from a 5 previously.

There then follows GDP data on Wednesday at 9.30, however, these are revisions from preliminary estimates already published, and are not expected to diverge.

At the same time as the GDP is released, we will also see key Business Investment stats for the fourth quarter, which will tell the level with which Brexit concerns are restraining investment, although this has not particularly been the case up until now.

On Friday, February 24 meanwhile we shall see the release of Mortgage stats from the British Banker Association (BBA).

The UK focus seems more likely to shift back to politics over the coming week as on Monday Parliament reconvenes after its February recess.

The House of Lords will begin debating the government’s bill to enable the activation of the Article 50 process to leave the EU.

The bill emerged unscathed through the House of Commons, and the Lords seem likely to make only modest tweaks.

“But the amendments do not seem likely to endanger the government’s end-March timetable for activation. Depending on the extent of the proposed changes, activation could even coincide with the EU Council meetings scheduled for 8-10 March,” says Sawicki.

Should the Lords succeed in making amendments to the bill we would expect this to be positive for the UK currency.

We have seen over recent months that markets tend to like the idea of increased parliamentary scrutiny as it suggests a ‘softer-Brexit’ is a likely outcome.