Market Outlook: Key Interest Rate Decisions and Economic Indicators to Watch This Week

Currency Pairs

Currency Pair	Mid-Market Rate
GBP – USD	1.2970
GBP – EUR	1.1891
EUR – USD	1.0906

Interest Rates & Inflation

Country	Interest Rate	Inflation
Eurozone	2.65%	2.4%
UK	4.5%	3.0%
US	4.5%	2.8%

GBP

• Thursday – ILO Unemployment Rate
  This measures the percentage of unemployed workers relative to the total civilian labour force and serves as a leading indicator of the UK economy. A rise in unemployment suggests stagnation in the labour market, which weakens the UK economy. The rate is expected to increase from 4.4% to 4.5%. However, if it unexpectedly declines, it would be seen as bullish for GBP.
• Thursday – Interest Rate Decision
  The Bank of England (BoE) is expected to hold interest rates at 4.5% after three consecutive cuts. A rate hike would be bullish for GBP, while a cut would be bearish.

EUR

• Wednesday – Core Harmonised Index of Consumer Prices
  This key inflation measure for the Eurozone excludes food, energy, tobacco, and alcohol. It is expected to remain unchanged at 2.6%. A rise would be bullish for EUR, while a decline would be bearish.
• Thursday – ECB President Christine Lagarde Speech
  Lagarde’s speech will provide insights into the ECB’s outlook on the European economy. A hawkish tone would likely boost the Euro, while a dovish stance could weigh on the currency.

USD

• Monday – Retail Sales (MoM)
  Retail sales serve as a leading indicator of consumer spending, a key driver of GDP growth. The figure is expected to rise to 0.7%, up from -0.9%. Strong data would support USD strength.
• Wednesday – Interest Rate Decision
  The Federal Reserve is expected to maintain interest rates at 4.5%. The Fed’s dual mandate focuses on keeping inflation at 2% and maintaining full employment. Higher rates typically strengthen the USD by attracting foreign investment, while lower rates tend to weaken the currency. If rates remain unchanged, markets will closely analyse the Federal Open Market Committee (FOMC) statement for hawkish (expecting future rate hikes) or dovish (expecting rate cuts) signals.
• Thursday – Initial Jobless Claims
  This tracks the number of new unemployment benefit claims in the US. A slight increase is expected, from 220K to 224K, which could indicate a weakening labour market and be seen as USD-negative.

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