A pivotal week of UK data begins as investors focus on the upcoming Bank of England rate decision.

The UK faces a packed week of economic releases, with key labor market and inflation data likely to shape expectations for the upcoming Bank of England policy meeting. Investors are watching closely for clearer indications on employment trends and price pressures.

Tuesday’s January employment report is forecast to show further cooling in the jobs market, alongside softer annual wage growth. Should these patterns persist into March, the case for a rate cut by the Bank of England next month would strengthen.

On Wednesday, January inflation data will be published. Headline CPI is expected to edge lower, reflecting volatile airfare pricing, easing food costs, and the fading effects of last year’s private school tax changes. However, core services inflation is projected to remain relatively steady.

Political uncertainty around Prime Minister Keir Starmer has eased somewhat, although betting markets still assign roughly a 70% chance that he could step down before the end of June.

Analysts at ING note that sterling tends to weaken when concerns about Starmer’s leadership resurface. Coupled with their dovish outlook for the Bank of England, ING continues to favor EUR/GBP, maintaining a target of 0.88.

Sources: Maria Ponnezhath