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.