020 7898 0500With no UK key data on Friday, sterling continued to weaken slowly as recent data releases have retracted from the positive picture of a few weeks ago. The week ahead is very busy for the UK with tier one data set for release on Tuesday, Wednesday and Thursday.
On Tuesday we have the headline inflation reading in the form of the consumer price index (CPI). Inflation is expected to tick higher to 0.7% as a weaker currency increases the cost of imports. On Wednesday, UK labour data is released. Average earnings for the previous rolling three month period are expected to drop quite sharply, while the claimant count is expected to grow. Thursday sees the Bank of England (BoE) interest rate decision. After last week’s quarterly inflation report and the stance the BoE Governor Carney took, we are not expecting to see any change in policy. On the same day we have the all-important retail sales numbers announced. Consumer spending accounts for a large part of the UK’s Gross Domestic Product figures (close to 75%) so are always monitored closely. The headline number is expected to drop and show sales declined by 0.4%.
