A handful of top-tier U.K. reports are lined up this week while another round of Brexit challenges for PM May might force her to give up the Iron Throne.
BOE Inflation Report hearings (May 21, 8:30 am GMT)
First up, we’ve got the Inflation Report hearings a.k.a. the AMA portion for Guv’nah Carney and his fellow BOE policymakers. They will be testifying in front of the U.K. Parliament’s Treasury Committee on their economic outlook.
In their latest policy statement and quarterly Inflation Report, the BOE actually upgraded their growth forecast and hinted of “more frequent” rate hikes than expected. However, head honcho Carney explained that this could be possible if there is a resolution to the Brexit impasse.
Still, the minutes of their policy meeting revealed that officials saw global growth as stabilizing and turning out better than expected. They also projected that unemployment could keep falling.
Their upcoming testimonies would likely take the latest Brexit setbacks into account, though, and it’s not looking good that the deal might suffer another big rejection.
U.K. inflation reports (May 22, 8:30 am GMT)
The U.K. is also set to print its latest batch of inflation reports this week, with the headline and core CPI likely garnering most of the attention.
The headline CPI for April is slated to jump from 1.9% to 2.2% while the core version of the report might tick up from 1.8% to 1.9%. If actual readings meet or beat expectations, this could fuel BOE tightening expectations and give pound pairs something to hold on to.
Producer input prices are also expecting to see quite the recovery with a 1.1% gain in April after a 0.2% dip in the previous month while producer output prices might show another 0.3% uptick. The retail price index is set to improve from 2.4% to 2.8%.
U.K. retail sales (May 24, 8:30 am GMT)
Consumer spending data is due later in the week, but the estimates aren’t looking so rosy. Headline retail sales for the month of April likely dipped by 0.1% after showing a 1.1% increase in the previous month while the core version of the report might print a 0.5% drop.
This market driver grabbed the spotlight in the previous week as the Brexit outlook became gloomier again. There have been talks of another vote on the transition deal next month, but the lack of any substantial changes keeps the odds of another rejection in play.If so, this would mark the fourth failed attempt to get an agreement across and would be a serious blow to PM May’s leadership. In that case, No. 10 might have no choice but to step down and name a successor… just a little over four months until the October EU deadline. Yikes!
With that, it wouldn’t be surprising to see sterling act extra sensitive to Brexit-related updates throughout the week as traders try to get a sense of how the next episodes might play out.
Missed last week’s price action? Read GBP’s price recap for May 13-17!