UK data
- Monday 11:00am CBI Distributive Trades Survey previous 25.0%
- Wednesday 9:30am Q4 GDP 1st Estimate previous 2.9%y/y
- Wednesday BoE release minutes from 10th-11th MPC Meeting
- Friday 9:30am BBA Mortgage Approvals previous 77.7 K
Last week the reason for the surprise rate rise became clear as CPI pushed up to 3% just shy of the level at which Governor King must write to the Chancellor. The Pound remained strong across the board during the week due to expectations of further monetary tightening despite weaker than expected average earnings and RICS Housing Survey releases. This week we see a relatively sparse data calendar populated mostly with second tier data. The primary focus for the market will be on the MPC minutes to gauge what the thinking was over the decision to raise interest rates and to assess monetary policy moves going forward. Due to the knowledge of the MPC members that inflation was going to push up to 3%, it would be surprising to see any dissenters.
US data
- Monday 3:00pm Leading Indicators Previous 0.1% m/m
- Thursday 3:00pm Existing Home Sales previous 6.3m
- Friday 1:30pm Durable Goods Orders previous 1.9%m/m
- Friday 3:00pm New Home Sales previous 1.047m
Last week the US started the week late with a market holiday on Monday but made up for it with a raft of data. Despite positive data that should have been USD positive the USD made little headway during the week and finished up where it started vs GBP and EUR. Core CPI was up 0.5% on the previous month and adds to the doubt that the FED are likely to consider loosening monetary policy in the near future. This week the main focus is likely to be the housing data as the market continues to look for signs of a soft landing in the sector of the economy.
Euro zone data
- Tuesday 10:00am EU industrial New Orders for November previous 0.6%m/m
- Thursday 9:00am German IFO Business sentiment Survey previous 108.7
Last week we saw German ZEW Economic Sentiment Survey show a sharp improvement in Europe’s largest economy. The main highlight however was the inflation data which showed HICP remaining constant at 1.9%, however the core figure rose from 1.5% to 1.8% leaving room for the ECB to raise rates by March. This week the market will look to the IFO business sentiment to see whether this survey echoes the positive tone set by the ZEW last week.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| UK(MPC) |
5.25% |
+25bps |
11/01/07 |
8th Feb |
| US (FED) |
5.25% |
+25bps |
29/06/06 |
31st Jan |
| EU (ECB) |
3.50% |
+25bps |
07/12/06 |
8th Feb |