Forex & Economic Commentary by Lloyds TSB

UK CPI and labour market data, and the BoE Inflation Report, will attract plenty of interest this week as markets weigh up the dilemma facing policy makers and the potential impact for interest rates and sterling. The sharp fall in energy prices suggests UK consumer prices may rise at a slower pace in the coming months, but the steady build-up of pipeline inflation pressures through this year and the recent announcement of fresh price hikes for utilities imply that we could still be some way off the peak for CPI.

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