UK: Focus on inflation and employment reports this week - BBH

According to the research team at BBH, the focus of UK markets in this week will be on the release of inflation and employment reports in the holiday-shortened week.  

Key Quotes

“Core inflation in the UK is expected to tick down to 1.9% from 2.0%.  Headline inflation may slow, but if it does, it will likely prove temporary.  The past decline in sterling and the rally in energy prices have not completely worked their way through the system.  Inflation has yet to peak in the UK.  On the other hand, the labor market remains firm, and the ILO measure of unemployment is expected to be steady at 4.7% in February.”

“The market often pays more attention to the average weekly earnings than to the unemployment rate. Average weekly earnings are expected to be steady at 2.2%, but they appear to be holding up due to bonus payments.  Excluding bonuses, average weekly earnings growth is expected to slow to 2.1% from 2.3%.  That would be the slowest rise since last July, which itself was the lowest since the end of 2015.  Softening wage growth will likely allow the BOE to look past the near-term overshoot of inflation.”