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Key economic data releases ahead

Very busy week on the market with risk events offered daily..

Looking at the charts, the Pound has been completely flat against the majors since Wednesday. As expected, a consolidation period was realised last week with Sterling standing firm after an initial dip at the start. This week will be very different though as we have a flurry of important data being released. 

Later today, BoE Governor Bailey is giving a speech which could create some volatility if he talks about interest rate cuts in the UK. Tomorrow's UK labour data is key and average earnings looks set to continue its downward trend (which is good news for inflation). 

On Valentines day, we see the core and headline inflation rate released with both expected to tick higher. Inflation has been sticky the last 2-months and more of the same could mean £ edges higher on release as it means the 'higher for longer' interest rate narrative is playing out. 

GDP data on Thursday could see recession fears being slowly realised in the UK with Q4 last year expected to show a negative reading. This could cause some confidence concerns and so we may see Sterling wobble a bit here. Finally, retail sales data on Friday could pile on more potential misery for the Pound if another negative reading comes to fruition.

The Euro has taken a bit of a battering since the turn of the year after having an overall positive 2023. Some traders are suggesting a prolonged period of weakness is ahead for the single currency, but this week may turn positive if events from elsewhere go in its favour. 

The US has probably the most important release of the week with its inflation news tomorrow afternoon. The US is closer than any other major economy in being close to its inflation target and therefore should be the first to initiate an interest rate cut (bad for USD)

The core number has been steadily dropping for over a year now with the headline number stagnating somewhat the last 6-months (hence why more data is required before the Fed act). It's a 50-50 call in where the $ goes this week..