Inflation data on Wednesday will be front and centre of trader’s minds for the upcoming week, as hopes build for a Bank of England base rate cut.
Following a 3.2% rise in prices over the year to March, markets expect the headline rate of inflation to have dipped below 3% in April.
Preliminary expectations are for the figure to sit at 2.7%, according to IG analysts, which, if correct, “should increase the chances of a rate cut in June”.
Based on Trading Economics’ consensus, inflation could well come in even lower for the month at 2.1%, in a “make or break” moment for upcoming rate cuts in the words of ING Economics analysts.
Any hotter reading will likely tilt odds towards a cut in August, ING added, but “either way, headline inflation will get very close” to the Bank of England’s 2% target.
Across the Atlantic, Federal Open Market Committee meeting minutes will be released on Thursday, offering insight into policymakers’ views on inflation as clues are sought for when the Fed may start cutting interest rates.
April’s UK retail sales data is then due on Friday, delving into the health of the sector, with Trading Economics forecasting a 1.1% increase over the month, against 0.8% in March.