020 7898 0500Sterling received an unexpected boost late in the day after what had been a relatively quiet start to the week for sterling as there had been no major UK data releases during the day. The boost was on the back of US interest rate sentiment swinging towards no change at next week’s Federal Reserve meeting following comments from one of the members of the forthcoming meeting who was urging caution on raising them too soon.
In the UK today we have the release of the Bank of England’s (BoE)preferred measure of inflation. Inflation is expected to tick slightly higher to 0.7%, which could be largely down to a weaker pound. Given the recent run of data there is some upside risk that the inflation figure could be higher. However, this number is still well below the 2% target of the central bank
Sterling movement will also be affected by activity levels in the economy as UK labour data is released on Wednesday. This is expected to show that conditions have deteriorated. Average earning figures for the previous rolling three-month period are expected to drop quite sharply whilst the unemployed claimant count is expected to grow.
On Thursday, the BoE interest rate decision is set for release. We are not expecting any change in policy from the central bank. However, on the same day we have the all-important retail sales numbers. Consumer spending accounts for a large part of the UK economy (close to 75%) so are always monitored. The headline number is expected to drop and show that sales declined by 0.4%.
