As inflation data is announced this week, eyes will be on the United States. As well as GDP data from the UK.

UK GDP Data

On Friday, the U.K. will report its second-quarter GDP figures, which are anticipated to edge slightly higher and show that the nation's economy is still all but stagnant. It almost reached a halt in the previous two months, but it shrank less than anticipated in May.

Last Thursday, the Bank of England increased U.K. rates to a 15-year high of 5.25%, its 14th consecutive hike, and issued a warning that borrowing prices would likely remain high for some time.

Inflation in the UK reached a 41-year high of 11.1% in October of last year and has since declined more slowly than elsewhere, peaking at the highest rate of any major economy in June at 7.9%.

Pullback In Stocks?

As some investors locked in profits following five months of gains, Wall Street finished lower on Friday, with weekly percentage falls for the S&P and Nasdaq being the most since March.

If the inflation numbers released on Thursday indicate that consumer prices are slowing, it might affect the near-term direction of the equity market. Investors are also intently monitoring the trajectory of Treasury rates after they recently shook markets by surging to new year highs in response to a downgrading of the U.S. credit rating by Fitch.

Since U.S. government-backed Treasuries are among the safest investments available, rising rates on these securities may reduce interest in equities.

The U.S. employment statistics released on Friday revealed that although job growth remained low in July, pay growth remained quicker than anticipated, escalating concerns that the Fed may decide to hold rates higher for longer.

US Data

On Thursday, the United States is scheduled to reveal statistics on July's inflation, which will demonstrate if price pressures are declining and whether markets are right to believe that the Fed is about to cease its aggressive cycle of interest rate rises.

Lower figures would increase the likelihood that the Federal Reserve would decide against increasing interest rates at its next September meeting following a quarter-point increase last month.

The U.S. will issue its July PPI statistics on Friday, and core producer prices are anticipated to increase by 2.3% from a year ago.

Eurozone Data

In today’s session, the Eurozone will get statistics on industrial output from Germany. It is anticipated that the report would show a drop in the context of a downturn in global demand, notably from China.

As a result of poor spending power, rising interest rates, and low manufacturing order books, the German economy contracted in the second quarter of 2023, missing projections for mild expansion.

(Sources: investing.com, reuters.com)