Following recent central bank meetings, markets have experienced volatility, accentuated by statements from UK officials suggesting that peak interest rates may have been reached, and potential rate cuts could commence from June next year. The current focus is on upcoming economic data, specifically anticipating a significant drop in inflation to around or below 5%, along with scrutiny of job market data, where signs of easing are hoped for by the Bank of England.

Friday’s UK growth numbers revealed zero growth for the third quarter, underscoring underlying economic fragility and painting a bleak outlook. Despite prior rate tightening, its impact on consumers is yet to fully materialize, and the economy faces ongoing unprecedented challenges, exacerbated by the uncertainty surrounding UK and US elections.

In the United States, the forthcoming critical inflation report holds the key to short-term market momentum. While the US economy continues to outperform, this strength is already well-reflected in market pricing.

Meanwhile, Europe braces for significant data releases next week, including growth and inflation figures that will significantly influence short-term market sentiment. The European Central Bank appears poised to initiate a rate-cutting cycle, potentially as early as March.

Expect heightened volatility on the exchanges in the coming week, driven by a deluge of economic data releases that will shape market direction against a backdrop of elevated uncertainty and subdued confidence.