9:30 am (Tues) UK CPI
This will be an important week for Sterling with Thursday’s Bank of England monetary policy meeting as well as key economic data releases.
Consensus forecasts are for interest rates to be unchanged at 0.25% with a 7-2 vote as the MPC is now at full strength. There is no new inflation report at this meeting and Bank Governor Carney will not hold a press conference. The statement’s tone will still be important given the possibility of a move to raise interest rates at the November meeting.
Latest inflation data will be released on Tuesday with the labour-market data on Wednesday. Trends in inflation and average earnings will have an important impact on interest rate expectations and currency direction.
Firmer than expected CPI data and a relatively optimistic bank tone are likely to be needed to sustain last week’s tentative Sterling recovery and push GBP/EUR back above the important 1.1000 level on a sustained basis.
Parliamentary debate on the Brexit repeal bill will continue to be monitored, although markets are not expecting major developments surrounding negotiations until after the September 24th German Federal election.
The main US data releases are concentrated late in the week with the CPI data on Thursday and retail sales release on Friday. Another lower than expected inflation print would reinforce expectations of low interest rates. The immediate focus will tend to be on hurricane Irma given significant damage to Florida.
There are no major Euro-zone data releases during the week, although any commentary from ECB sources will gain by a significant focus ahead of October’s key meeting. Markets will also be on alert for any G20 comments on the need for market stability in light of recent currency-market volatility.