Bank of England's Carney in the spotlight

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The Bank of England's (BoE) inflation report is not usually renowned for crashes, bangs or wallops. Yet on Wednesday, U.K. market watchers will be following it with bated breath as new BoE Governor Mark Carney gives his first press conference.

Carney's move from Canada to the U.K. has been much-anticipated, but he has stayed quiet so far.

The publication of the inflation report comes during one of the most positive weeks of U.K. economic data this year. On Tuesday, the services Purchasing Managers' Index (PMI) survey - up to 60.2, its highest level for nearly 7 years - and the composite PMI index both indicated that optimism is returning to businesses in the country. British shoppers boosted the high street during an atypically sunny July, according to British Retail consortium figures, and the Halifax house prices index showed a 0.9 percent rise between June and July. Sterling rose against the dollar following the news.

(Read more: Carney's conundrum: To guide or not to guide?)

Much of the attention on Wednesday is likely to focus on whether the BoE announces that it will start issuing forward guidance – in effect making forward guidance on forward guidance – which could risk damaging its credibility if it gets the predictions wrong.

British business group the CBI said forward guidance would add "a welcome injection of certainty around interest rates for businesses and consumers".

"As evidence of an improvement in the economy continues to build, additional clarity around monetary policy could give the boost needed to get back up to a sustainable level of growth," Neil Bentley, deputy director general of the CBI, said.

(Read more: Expect 'radical changes' from the Bank of England)

Economists are starting to argue that this could point towards a better-than-expected gross domestic product (GDP) growth in the third quarter of the year. "It looks as if the economy is benefiting from a period of both stronger and better-balanced growth," Samuel Tombs, U.K. economist at Capital Economics, argued.

Yet there is still plenty of evidence to back a cautious approach. Inflation is still outstripping earnings growth, and while household debt has fallen from the peak of close to 170 percent of household income in 2008, it is still hovering at around 140 percent, according to the BoE.

(Read more: ECB's Draghi confirms forward guidance)

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