Critical economic data such as inflation, jobs, and retail sales are due in the UK. These numbers will play a decisive role in the Bank of England's rate decision next month. Currently, the market is anticipating a 75% chance of a further hike to 4.50%, which is expected to be the highest point.

This week, UK economic data has been mixed, with monthly growth remaining stagnant while construction and manufacturing surpassing expectations. According to the IMF, the UK economy is projected to shrink by 0.3% this year and rank among the worst-performing G7 economies in 2024.

In the US, inflation decreased to a lower-than-anticipated 5%, marking its lowest level in nearly two years. However, an increase in 'core' inflation will put pressure on the Fed, which is expected to raise rates for the last time in May. With the possibility of a mild recession, markets are pricing in rate cuts later this year, which is negatively affecting the dollar's sentiment.

The European Central Bank remains the most cautious with further rate hikes expected in the coming months due to the challenging inflationary outlook.

In the exchanges, sterling is trading near a yearly high against the dollar at 1.2500, but has weakened against the euro at 1.1300 due to the expected variance in interest rate differentials.