European agenda is on market watch Tuesday, featuring first-tier consumer and producer prices data for the month of January, expected to show annual inflation is holding at 2 percent- in line with the Bank of England’s target.

The upcoming United Kingdom economic calendar is very active this week, as it kicks the week’s highlights off with Consumer Price Index (CPI), Producer Price index (PPI) and, Retail Price Index (RPI) data to be released.

The closely watched ILO unemployment data is to mark Wednesday, while the royal economy ends the hectic week with retail sales and public finances reports.

The most recent data has suggested the economy is moving on the right track and the BOE may be the first central banks among developed nations to raise interest rate. While the central bank acknowledged quicker than anticipated recovery in both its minutes and its February inflation report.

The Office for National Statistics (ONS) data out on Tuesday is expected to show:

- Annual CPI probably steadied at 2.0 percent in January

- Annual PPI output is estimated to decline to 0.7 percent from 1.0 percent

- Annual PPI input likely fell 2.9 percent from 1.2 percent decline

- Annual RPI also unchanged at 2.7 percent

CPI is important because it is the measure targeted by the BoE`s interest rate-setters. Policymakers have been forced to tolerate the above-target inflation as they keep interest rates low to try to shore the recovery back to health.

During a press conference that accompanied inflation report release, Governor Mark Carney said inflation has been lower than forecasted, thereby easing pressure on policymakers to raise interest rate.

Inflation is estimated to fall back to as low as 1.7%in the second quarter of 2015, and it will gradually accelerate after that, reaching 1.9% in 2016.

Monetary conditions had tightened further following evidence of a strengthening recovery, particularly the news on unemployment.

Carney announced last week that BoE will no longer use the unemployment rate as a trigger for considering a rate hike in UK.

Unemployment rate for the three months ended November dropped to its lowest in nearly five years of 7.1%, taking a faster step towards the 7% threshold. Investors will be closely watching Wednesday’s jobs data, which is expected to show unemployment steadied in the three months ended December.

The central bank made no changes to its monetary policy earlier this month, sticking to its pledge to keep interest rates at a record low of 0.5% for the foreseeable future despite signs of a strengthening economic recovery.

The UK eased its pace of expansion in the last quarter last year, giving a sign of caution recovery may be losing steam. The British economy grew 0.7 percent in the three months through December, and recorded 2.8 percent growth on the yearly basis from a prior of 1.9 percent.

Carney added that recovery had gained momentum as the Bank raised its forecast of growth this year from about 2.8% to 3.4% and increased its projection of 2015 expansion from 2.3% to 2.7%.

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