Sterling finished the week with a strong rally against the US dollar, with positive sentiment over the Greek debt situation resulting in investors willing to move from the US dollar. However, this same sentiment saw sterling slip to the lowest level in almost a month against the single currency.
The week ahead promises to bring a greater focus on UK economic data. The Bank of England (BoE) credit conditions survey will be released today, and will include data on lender confidence. Tuesday’s release of June inflation data is likely to carry more weight, and is expected to show a second month of modest inflation at 0.1%. Core inflation (discounting volatile energy & food prices) should show a much healthier 0.9% figure.
Moving into Wednesday, average earnings data will be released. Following a troubling start to the year, this data has shown a significant improvement over the last few months, suggesting that slack in the job market is being taken up. A further increase to 3.3% growth would increase calls to consider an interest rate hike. Alongside this will be release of the latest unemployment rate, which should remain at a six-year low of 5.5%.
BoE Governor Mark Carney will round off the significant releases from the UK economy on Thursday as he speaks at Lincoln Cathedral. As ever, investors will be listening intently for any hints as to future monetary policy from the central bank.