Sterling continued its losing run suffering a poor day on Friday, with a large portion of the gains made on Thursday against the euro being erased. The UK currency performed marginally better against the US dollar, but still found itself losing ground following the recent statement from the US Federal Open Market Committee (FOMC), which inspired optimism for the US economy.
This week sees key inflation data from the UK released on Tuesday in the form of the consumer price index. This is seen as the most important inflation data for the UK, as it is used as the Bank of England (BoE)’s key inflation target. Increased inflation could put pressure on the BoE to hasten interest rate increases but the expectation is for a reduction to 1.7% for February from the January figure of 1.9%, which are both below the target of 2%. The release of retail sales data on Thursday is also a key event, given that it is the primary gauge of consumer spending for economists. Retail sales are expected to have returned to growth in February having suffered an unexpected fall in January. Any unexpected surprises in any of these figures could impact significantly on sterling.
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