A look at the day ahead in European and global markets from Kevin Buckland

This week, and this month, are once again showing that data is king, with investors parsing recent economic releases for clues on the likely pace of interest cuts at the Federal Reserve and the Bank of England.

Potential flashpoints for policy expectations loom for the currency markets on Thursday, when U.S. retail sales and Britain's GDP are due for release. The dollar and the pound could move sharply in either direction, depending on the results.

Mild readings for U.S. inflation this week have cemented market certainty that the Fed will lower borrowing costs in September for the first time in 4 1/2 years, but debate still rages over whether policy makers will opt for a super-sized 50 basis-point reduction or a more standard quarter-point cut.

Minds can change quickly, though. The estimated chance of a 50 bp cut fell to 36%, down from 50% just a day earlier, after the mild but potentially sticky CPI. It had risen to 71% early this month when surprisingly weak U.S. payrolls data roiled global markets across asset classes.

Today, it's retail sales - a key indicator considering that consumption accounts for about two-thirds of U.S. economic growth.

We'll also hear from some regional Fed officials, with St. Louis chief Alberto Musalem and Philly boss Patrick Harker on the speakers' list.

The dollar sagged overnight against the euro to its lowest since the end of last year. Sterling was even softer, sagging some 0.5% versus Europe's shared currency.

The culprit was a softer-than-expected UK consumer inflation reading that stoked speculation of faster and deeper BoE rate cuts.

Up later in the day are GDP estimates and a parade of other data, including industrial output.

Traders are split on the chances of another rate reduction by the BoE a month from now, after it kicked off a rate-cutting campaign earlier this month in a close-call decision.

On the more immediate horizon, the Norges Bank announces policy today, with officials widely expected to delay any easing as they fret about spurring additional weakness in the Norwegian krone.

Key developments that could influence markets on Thursday:

-UK GDP, services, industrial output, manufacturing output

-Norges Bank policy decision

-US retail sales, industrial production, initial jobless claims, Philly Fed business index

(By Kevin Buckland; Editing by Edmund Klamann)