Data from the United Kingdom is likely to show increasing wage growth and core inflation, supporting the case for a rate hike next month, explained analysts at Danske Bank.
“There are two very important data releases in the UK next week, as the Bank of England still seems on track to deliver a rate hike at its meeting next month. On Tuesday, the labour market report for February is due out. We expect the annual growth rate of average hourly earnings excluding bonuses (3M average) to increase to 2.8% y/y from 2.6% y/y, as the weight of the monthly fall in December 2016 becomes less important. We believe the unemployment rate (3M average) will remain at 4.3%.”
“On Wednesday, we are due to get CPI inflation data for March. We estimate CPI inflation was unchanged at 2.7% y/y in March (but lower second decimal), while core CPI inflation may have risen to 2.5% from 2.4%. Our base case is still that CPI inflation will move lower this year, as food price inflation has peaked, energy prices are stabilising and the impact of past GBP depreciation is fading.”
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