UK: Busy week for the British economy – RBC CM

Elsa Lignos, Senior Currency Strategist at RBC Capital Markets, suggests that it is a busy week for the UK, with August inflation, July labour data, and the BoE MPC decision and minutes.

Key Quotes

“Taking each in turn: first up is inflation on Tuesday (RBC & cons: 0.7%y/y, prior 0.6%). Full details of our inflation forecasts in UK: Brexit data-watch. Our economists look for an increase in inflation to above 2% in H1 2017. Next up are labour market data (Wed) although July numbers are unlikely to give too much direct insight on the impact of the referendum. Finally we have the BoE decision and minutes. No change in policy is expected this time, and there isn’t likely to be much elaboration on the Committee’s view about post-referendum economic performance.

We know the Committee are cautious about placing too much weight on the survey indicators after the vote, so it is clear they are taking a longer-term approach. On that basis, the prospect of a cut in Bank Rate in November remains our central case, as another move before year-end was mentioned as likely in the August MPC minutes if developments met expectations in the August forecast. The September MPC meeting will be Michael Saunders’s first vote, and although his stance is unknown as he succeeds Martin Weale, the base case is for a 9-0 vote for no change.”