After the release of weak flash manufacturing and services PI readings from the United Kingdom on Monday, eyes will focus on the inflation data ahead of the Bank of England rate decision.
Analysts expect the consumer price index, the BOE’s preferred measure of inflation, may decelerate to 1.4 percent in November year-on-year from 1.5 percent recorded in October.
It seems that November’s figures would not change the inflation track in Britain, as the rate would remain below the BOE’s target of 2 percent.
However, policymakers have recently been more worried about the labor market than inflation, and yesterday’s unemployment data showed stability in unemployment and slowdown in wage growth in the quarter ended October.
As for pound traders, they should keep their focus on the latest Brexit developments after the win of Prime Minister Boris Johnson’s Conservative party in the general elections last week.
While the process of exiting the EU and the future of Britain thereafter remain the key movers of the pound, investors should also keep their eyes on the BOE rate decision on Thursday.
Monetary policymakers may decide to keep the cost of borrowing at 0.75 percent, but the minutes of the meeting would reveal the different point views among the nine-member MPC committee regarding interest rates.
The British economy probably grew at a rate of 0.3 percent in the quarter ended in September, according to the final gross domestic product reading, following a contraction by 0.2 percent in the second quarter.
The pound may resume
its plunge after hitting a record high of 1.3514 on Friday, following the win
of the Conservatives with an overwhelming majority.