Inflation data is the main focus on the economic calendar in Europe today, and the UK CPI report will take center stage as a hot, fresh release. The Eurozone CPI report, by contrast, is the final estimate for July, which typically is not much of a market mover because the numbers do not tend to deviate much from the initial readings.

The UK inflation figures will be of considerable interest, as they will feed into how markets take to the Bank of England (BOE) outlook in the final few months of the year — particularly with price growth still running above the BOE's 2% inflation target. The inflation pulse will carry more weight than the labour market data released yesterday, which makes today's data release all the more important.

Headline annual inflation, which captures volatile energy and food costs, is estimated to rebound from the June low of 2.6% (unrounded 2.65%) to 2.9% in July. Meanwhile, core annual inflation, which strips out energy, food, alcohol and tobacco, is estimated to dip slightly to 2.5% (unrounded 2.52%), compared with the June reading of 2.6% (unrounded 2.57%). If the core estimate comes in around that level, it will keep close to the BOE's own forecast of 2.55%.

The pickup in headline inflation is once again due to the swing in energy prices. The rise in the Ofgem price cap — the quarterly ceiling on default household energy bills set by Britain's energy regulator — for Q3 will also be part and parcel of that, and is likely to boost energy price inflation, which in turn will provide a boost to headline inflation.

As for services inflation, it is expected to remain sticky but to reflect a decline to 3.4% in July, compared with 3.6% in June. Services prices are a measure the BOE watches closely as a read on domestically generated, wage-sensitive pressure, so their trajectory often matters more to the policy debate than headline swings driven by energy. Some analysts are pointing to base effects in air fares, while others expect the government's Great British Summer savings policy to put a drag on prices for recreational and catering services. On the latter, the range of calls stretches from no material impact at all to a 0.1% to 0.2% drag on headline inflation.

Barring any major surprises, the numbers should not change the BOE outlook all that much at the end of the day. Traders are pricing in approximately 78% odds of no change in September, while the next decision in November is seen as more of a coin flip. So unless inflation unexpectedly threatens a surge back to 3% or higher, the BOE can rest a little easier today ahead of the upcoming policy decision next month.

As for the Eurozone inflation figures, they will likely just reaffirm what is already known from the preliminary report: Euro area inflation nudges up in July, keeps the pressure on the ECB.

The only difference is that market pricing for a September rate hike has firmed in recent weeks, with the odds now showing roughly 91%. That comes after some recent hawkish commentary from the ECB in posturing for the next move. Adding to that, higher energy prices and recent US-Iran developments are putting more pressure on policymakers to make their final move. From last week: ECB poised to deliver another rate hike in September - poll.