A very uncomfortable place

GBP
A very uncomfortable place

Last week, UK inflation data just missed expectations. The Bank of England's new Chief Economist, Huw Pill, has suggested that UK consumer prices could rise by 5.0% or more by early 2022, adding: 'That's a very uncomfortable place for a central bank with an inflation target of 2.0% to be.' One of the main events in the week ahead will be the UK Budget announcement by Chancellor Rishi Sunak. It's expected more funding will be pushed in the direction of the NHS as the UK prepares for a tough winter with Covid cases on the rise. The Pound may fluctuate on central bank speculation in lieu of any high-tier data in the week ahead.

EUR
ECB statement ahead

The Pound to Euro exchange rate touched its highest level since February 2020 last week. In the week ahead, the European Central Bank will release its latest monetary policy statement on Thursday, and markets will be looking for any change in attitude from policymakers. The bank's been insistent that inflation rises will moderate next year. Still, if policymakers decided to take on a hawkish tone, it could be a surprise given the recent data backdrop. Other events will include German growth and Eurozone inflation stats due out later in the week.

USD
Ready to taper

The Pound managed to reach five-week highs last week, but closed the week flat against the US Dollar. On Friday, US Federal Reserve Chief Jerome Powell announced that the central bank is ready to begin tapering its asset purchases but wasn't yet in a position to start increasing interest rates. Markets are currently anticipating interest rate hikes to take place in the US between May and July. In the week ahead, influential inflation data will be on the market's radar, with a number of companies speaking out about rising consumer costs. Additionally, high-tier Durable Goods Orders and growth stats will also be released and could impact the way the US Dollar trades.

AUD and NZD
Surging inflation

Last week, the Pound brushed its lowest level since July versus the Aussie Dollar and the weakest point since May against the Kiwi Dollar. Recent data has shown New Zealand's inflation levels have surged at their quickest pace in ten years in Q3, encouraging speculation that the Reserve Bank of New Zealand could keep hiking interest rates. Inflation levels have jumped from 3.3% in Q3 to 4.9% in Q3, bypassing forecasts of a rise to 4.2%. In the week ahead, Australia will release its own inflation data for Q3, as well as Retail Sales stats. In New Zealand, trade balance and business sentiment numbers will reach markets.

CAD
BoC rate decision ahead

The Pound touched its lowest level since May versus the Canadian Dollar last week. This week, the Bank of Canada will announce its latest interest rate decision and release its Monetary Policy Report. Expectations are for the central bank to keep rates on hold at 0.25%, but investors will look closely for any language change. Other influential data will include August's growth figure, which is forecast to show 0.7% growth, following July's -0.1% contraction.