Investors this week will be looking for signs of the Bank of England launching a 50 basis point rate rise at its next meeting on 4 August.
London’s premier FTSE 100 index posted a mild performance over last week, dropping 0.56 per cent to end at 7,168.65 points.
The domestically-focused mid-cap FTSE 250 index however notched heavy blows, shedding 2.55 per cent to round the week off at 18,636.98 points.
Several members of the Bank’s rate setting committee speak this week at the Global Banking and Finance conference, spearheaded by chief economist Huw Pill on Wednesday.
Traders are betting Threadneedle Street will need to launch several larger rate rises to tame a 40-year high inflation rate of 9.1 per cent.
“With market pricing unwinding given the recent global rally, all eyes will be on the 25 basis point rate setter camp on whether they see enough evidence to trigger a slightly faster pace of rate hikes in the coming meetings,” Sanjay Raja, senior economist at Deutsche Bank, said.
New services and construction PMIs, out on Tuesday and Wednesday respectively, are expected to show momentum in the UK economy running out of steam as a result of firms struggling to maintain production amid shortages and weakening demand caused by rising living costs.
On Friday, fresh US jobs figures will be eyed for signals of firming wages as an indicator of whether the US Federal Reserve will lift borrowing costs 75 basis points again later this month.
Ten Entertainment and Entain lead the corporate agenda, both updating markets on Thursday.