(MENAFN– ecpulse) This week, investors will keep their attention on economic data from the euro area and United Kingdom to gather clues about the strength of recovery that would decide when the key European central banks would change their monetary stance.
Starting with the euro area, confidence, unemployment and inflation figures will grab attention.
Data released last week showed that German investor confidence retreated for the first time in six months in January to give a sign of caution.
Business confidence in Europe’s biggest economy probably resumed its rally heading above December’s 20-month high of 109.5 to record 110.0, according to forecast a report due this week.
In the euro area, economic confidence data may show further improvement in January to 101.0 from the two-year high recorded in December.
European policymakers will convene this week to continue their pursue to jolt the economy out of the debt crisis which garroted the 18-nation region since the end of 2009.
Eyes will focus on both Eurogroup and Ecofin summits in Brussels, on January 27 and 28 respectively, where the main discussed issues will include fiscal advice to EU member states that are not involved in EU-backed rescue programs in addition to economic governance and regulations for more operative fiscal adjustment.
Despite the signs of recovery that appeared from the most recent data, still there are some challenges in front of policymakers that could hamper recovery.
Perhaps the clearest is the drop in inflation far below the ECB’s target. CPI for the year ended January will rebound to 0.9 percent after slowing to 0.8 percent in December, according to median projections.
However, ECB President Mario Draghi said last week "the risks of deflation or inflation are limited," but he warned, “recovery is still weak and distributed unequally."
By and large, unemployment remains one of the key challenges as the rate is estimated to linger at its record high of 12.1 percent in December.
Moving to the U.K., the most important data would be GDP for the last quarter of 2013 as it would determine the real strength of recovery.
The most recent data suggested the economy is moving on the right track toward recovery after posting an expansion of 0.8 percent in the three months ended September.
This week’s report may show that Britain growth slowed to 0.7 percent in the final three months last year.
While inflation hit target and unemployment is near the BOE’s 7 percent threshold, MPC members referred that there is no need to raise interest rate soon as “headwinds for growth would persist for some time.”
One of the obstacles that Carney has warned of is the appreciation of pound as it resumed its rise against majors last week after the better-than-forecast drop in unemployment in the quarter through November.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.