UK: CPI next week, key data after BoE meeting - Danske Bank

Next week in the UK, key inflation data is due with the CPI.  According to analysts from Danske Bank the data will be relevant, as the Bank of England may increase rates as early as May.

Key Quotes: 

“In the UK, the most important release is the CPI inflation figure for January on Tuesday, not least now the Bank of England may hike in May, as it fears overheating in the economy. We estimate CPI inflation fell from 3.0% in December to 2.9% in January, driven mainly by a smaller contribution from the energy component, as a big monthly increase in January 2017 falls out, and food. We estimate CPI core inflation rose from 2.5% to 2.6%. Further down the road, we think inflation may fall back towards 2% more quickly than the Bank of England projects.”

“We are also due to get retail sales in January on Friday, which markets sometimes move on, but this is a poor indicator for actual private consumption growth.”

“Otherwise, focus remains on Brexit, which remains a key driver for GBP. We are still monitoring the negotiations on transition and the future relationship, as this week’s meeting of the UK’s so-called ‘Brexit war cabinet’ did not reveal anything about the UK’s negotiating position.”