UK Inflation and Labor Market Data to Set Tone for Central Bank Policy

Financial markets will be closely watching key economic indicators from the UK and US in the coming week. The UK's inflation rate is expected to rise back up to 3% in July, partly due to a 13% increase in household energy prices. Meanwhile, the US industrial production data is forecast to show a modest 0.3% month-on-month growth.

The US Federal Reserve's July minutes will also be scrutinized for any shift in thinking among policymakers, particularly after new Fed Chair Kevin Warsh's press conference caused confusion about the central bank's interest rate hike plans.

In the UK, private sector hiring and wage growth are expected to remain weak, with a fragile jobs market and below-target inflation. The Bank of England is unlikely to raise interest rates through 2026, but may cut them in 2027 instead.