Thomas Watts, Senior Investment Analyst at Aberdeen MPS, comments on the economic data releases this week.
“The coming week could be defined as a tale of two central banks, with the US Federal Reserve and our very own Bank of England (BoE) setting their respective lending rates whilst also giving their views on the economies they steward.
With uncertainty over US trade policy and the Labour Party’s employment reforms and increased National Insurance contributions yet to fully wash through the domestic economy, both banks seem to be in wait and see mode, with investors predicting no moves this coming week.
However, even if no rate cuts are being priced in by markets for this month, it is the forward guidance we’ll received that should prove invaluable. Markets are currently pricing in around two further 0.25% rate cuts for both central banks, the first of which for both could come during the late summer. Investors will listen carefully to both accompanying press conferences for any clues or hints dropped as to when either will feel comfortable about making a move on rates.
Aiding the Bank of England with their thoughts, the coming week will also see UK Inflation data released on Wednesday. With the reading having jumped significantly for April to 3.5%, many will be hoping that number starts to fall sooner rather than later.”
