The UK economic calendar is chock full of important economic data this week.
January producer prices were released this morning and much stronger than expected numbers helped the British pound recover some of last week’s extensive losses. The numbers suggest that the Bank of England could slow down their pace of rate cuts as prices at the factory gate surged to 16 year highs. Consumer prices are due for release tomorrow and the forecast is for a 0.6 percent drop. Given the rise in producer prices and the low forecast, there is a decent chance that we will also see consumer prices grow more than expected. The rest of the data released this morning mattered little as the wider trade deficit was offset by a rebound in house prices. The UK economy is slowing and the question ahead is whether high inflation will prevent the BoE from easing interest rates as aggressively as necessitated by the UK economy.
