UK data this week shows a weakening economy, with worsening consumer and business sentiment due to rising taxes, high prices, and recession risk. Record gov't borrowing exacerbates the challenges ahead.

The Bank of England is still expected to raise interest rates by 0.5% to 4.0% next week, but another split vote is likely. The rate peak forecast has dropped to 4.35%, with a potential rate cut priced in for late 2023. The central bank must balance high inflation, a tight job market, and a weakening economy.

The US central bank is expected to raise rates next week, but with a smaller hike of 0.25%. The market predicts a peak rate of 4.90% in Q2 2023 as inflation continues to drop.

ECB officials remain hawkish and are expected to keep raising rates in 0.50% increments to curb inflation.

Next week will likely see extreme volatility across assets due to central bank meetings, followed by the crucial US jobs data on Friday.

Dollar weakness is the main theme on the expected Fed slowdown and positive risk environment. GBP/USD is near 7-month highs but capped at 1.2500, while GBP/EUR stays in the range of 1.1250-1.1550.