The Week Ahead: UK inflation, Rio Tinto results, flash PMI data

Welcome to our pick of the top three market events to look out for in the week beginning Monday 17 February. The scheduled economic news flow will ease up a little, partly because US markets will be closed on Monday for Presidents’ Day. 

On Wednesday we’ll get an important update on UK inflation, which could affect GBP/USD. The same day, the release of minutes from the US Federal Reserve’s recent rate-setting meeting could shed light on policymakers’ thinking on US monetary policy. In all likelihood the minutes will underscore the Fed’s plans to keep rates on hold for the foreseeable future as inflation stalls above the central bank’s 2% target and the labour market stabilises. Then on Friday, the US, the UK and the eurozone will release purchasing managers’ index (PMI) readings for February, offering a snapshot of economic trends in the manufacturing and services sectors.

UK January CPI

Wednesday 19 February
Inflation in the UK has picked up slightly since September, when the annual rate of consumer price growth sank to 1.7%. In November the consumer price index increased 2.6% year-on-year, before easing to 2.5% in December. Economists estimate that CPI may have decreased to 2.4% in January, but that’s still above the Bank of England’s 2% target. Core and services inflation are running even higher, at 3.2% and 4.4%, respectively. Despite persistent inflationary pressures, the market expects at least two more rate cuts from the BoE this year. The January CPI figures could play a key role in confirming or reshaping those expectations.

Perhaps because further BoE rate cuts are priced in, GBP/USD recently stabilised around $1.256. On Friday, the pair edged up towards $1.259, its highest level since December. If CPI comes in higher than expected, the pound could strengthen further against the dollar. The current resistance level to watch is at $1.26 – a breakout above this area could send the pound towards $1.27 or possibly $1.28. The risk is that a higher-than-expected inflation print could stoke fears that the UK economy is suffering from stagflation – a blend of low growth and high inflation. That could undermine investor confidence in the UK, potentially sending GBP/USD lower. 

GBP/USD, August 2024 - present

^{Sources: TradingView, Michael Kramer}

Rio Tinto full-year results

Wednesday 19 February
Analysts expect Rio Tinto to report second-half earnings of $3.54 on revenue of $26.8bn, up 0.5% year-on-year. In the first half of 2024, the British-Australian metals and mining company posted similar figures, with earnings of $3.54 on revenue of $26.8bn (up 1% year-on-year). Net earnings came in at $5.8bn. Looking ahead to the first half of 2025, analysts forecast that earnings will decline 16% to $3.13 a share as revenue falls 0.5% to $27.2bn.

Trading on Friday at 5,125p, the FTSE 100-listed shares have trended sideways since 2020. The stock, which does not seem to have benefited from rising prices for copper, instead reflects the sluggishness in iron ore prices. That said, technical analysis shows that the relative strength index (RSI) has been trending higher since the turn of the year, indicating positive momentum as the shares have risen from around 4,720p at the beginning of January. With the shares near a downward trend line, a break higher could send the stock price towards resistance at 5,240p. 

Rio Tinto share price, June 2024 - present

^{Sources: TradingView, Michael Kramer}

February PMI data

Friday 21 February
Purchasing managers’ index data from the US, the UK and eurozone will help shape views on the global economy in February. The figures may also indicate whether the US economy continues to diverge from Europe and the UK. If the US delivers another strong performance or the eurozone shows signs of recovery, EUR/USD could be impacted.

The currency pair is showing signs of having formed a bottom, potentially laying the foundations for a stronger euro, which is challenging resistance around $1.045. If the euro rises above this level, we could see a short-term breakout in which EUR/USD may push towards $1.06. The RSI is trending higher, suggesting that momentum has turned favourable for the euro.

Whether any potential rebound is short-lived or the start of a more sustained recovery remains unclear, but the recent rise in EUR/USD is notable. At the very least, further strengthening seems possible in the near term.

EUR/USD, June 2024 - present

^{Sources: TradingView, Michael Kramer}

Key economic and company events

The coming week’s major economic announcements and scheduled US and UK company reports include:

Sunday 16 February

• Japan: Q4 gross domestic product (GDP)

Monday 17 February

• Germany: Bundesbank (Buba) monthly report
• US: Presidents’ Day (US markets closed)
• Results: No major scheduled earnings announcements

Tuesday 18 February

• Australia: Reserve Bank of Australia interest rate decision
• Canada: January consumer price index (CPI)
• UK: December unemployment rate, December average earnings, January claimant count change
• Results: Antofagasta (FY), Arista Networks (Q4), Baidu (Q4), Cadence Design Systems (Q4), InterContinental Hotels (FY), Medtronic (Q3)

Wednesday 19 February

• New Zealand: Reserve Bank of New Zealand interest rate decision
• UK: January CPI, January producer price index (PPI)
• US: Federal Open Market Committee (FOMC) meeting minutes
• Results: Analog Devices (Q1), BAE Systems (FY), Etsy (Q4), Garmin (Q4), Glencore (FY), Rio Tinto (FY), Wingstop (Q4), Wix (Q4)

Thursday 20 February

• Australia: January unemployment rate, February Judo Bank flash purchasing managers’ index (PMI) data
• China: People’s Bank of China interest rate decision
• Germany: January PPI
• Japan: January CPI
• US: Weekly initial jobless claims to 14 February
• Results: Alibaba (Q4), Anglo American (FY), Birkenstock (Q1), Booking Holdings (Q4), Centrica (FY), Lloyds Banking Group (FY), MercadoLibre (Q4), Mondi (FY), NetEase (Q4), Nu Holdings (Q4), Rivian Automotive (Q4), Southern Company (Q4), Walmart (Q4)

Friday 21 February

• Eurozone, France, Germany, UK, US: February flash PMI data
• UK: January retail sales
• Results: Constellation Energy (Q4), HSBC (FY), Standard Chartered (FY)

Note: While we check all dates carefully to ensure that they are correct at the time of writing, the above announcements are subject to change.