GBP - BoE MPC Minutes, inflation and retail sales

The GBP has rallied strongly following an unexpected majority victory for the Conservative party in the 2015 general election, which removed a large degree of near-term political risk premium. 

However, last week's Bank of England Inflation Report incorporated downward revisions to its GDP growth forecasts, and Governor Carney indicated that tight fiscal policy is one factor that will likely delay the timing of rate rises and result in a more gradual pace of monetary policy normalisation. 

As such, BoE MPC Minutes (Wednesday) will be closely watched. The vote remained unchanged at 9-0 for rates and asset purchases, the Minutes may reveal details relating to the influence of fiscal consolidation and the EU referendum on the monetary policy decision. 

Barclays notes:

• We expect relative economic performance to drive further falls in EURGBP but to weigh on GBPUSD. April CPI inflation and retail sales (Tuesday and Thursday, respectively) are also important. 
  
  
• We forecast CPI inflation to have risen 0.5% m/m in April, to +0.1% y/y (consensus: 0.4% m/m and 0.0% y/y, respectively). 
  
  
• We forecast retail sales to have grown 1.8% m/m (consensus: 0.4% m/m) in April, due to a surge in Barclaycard spending.