Busy second half of the week for sterling may be overshadowed by US rate decision

Sterling gained ground against the US dollar on Friday, despite better-than-expected retail sales data from the US. Although this would usually see sterling lose ground against the US dollar, further concern over global energy prices saw sterling push higher throughout the afternoon. In contrast to this, sterling fell away against the euro as it struggled to break away from recent one-month lows.

A quiet start to the week sees us wait until tomorrow for the first major economic data from the UK. Inflation data will be released in the morning, and is expected to have shown a modest increase of 0.1% throughout November. Employment data will follow on Wednesday, with attention focused on average earnings over the previous quarter. This figure is monitored closely by the Bank of England (BoE) while it considers interest rate decisions, making it a significant figure. Retail sales data for the previous month is set to be released on Thursday, although this is likely to be overshadowed by the announcement of the latest US Federal Reserve interest rate decision overnight.