Dear Reader,

Today's overview of economic news and market action

• There was a positive tone to risk appetite at the start of the week on financial markets …
• Currency-wise, the main pairs were tightly range bound throughout the European session …
• Of the limited moves to register, sterling was slightly softer, while the dollar firmed overnight …
• As trading gets underway this morning, EUR/USD opens back at the $1.03 threshold …
• GBP/USD is operating down nearer to the midpoint of the $1.23-1.24 corridor …
• Meanwhile, EUR/GBP is changing hands in the lower half of the 83-84p band …
• Today, remarks from a number of central bank officials will warrant attention …

All rates quoted are indicative market rates.

The AIB Irish Construction PMI survey for January showed a weak start to the year for the sector. The headline index fell back into contractionary territory, with a reading of 48.2 in January, down from 51.6 in December. This is the fourth time in five months that the index has been below 50, highlighting the subdued backdrop for building activity. However, adverse weather conditions in the month, especially Storm Éowyn had a dampening impact on overall construction levels.

The latest AIB Ireland Services PMI® survey indicated a soft start to 2025 for the Irish services economy. Growth of new business and total activity were maintained, but at the weakest rates in nine and four months, respectively. Outstanding work barely rose and employment was broadly unchanged, with job cuts recorded in financial services.

2025 commenced on a solid note, with the Irish manufacturing sector recording an improvement in operating conditions for the first time in three months. Fresh expansions were noted for both new orders and output. More positively, confidence for the year ahead outlook remained strongly optimistic, with many businesses planning to expand capacity.

ECB cuts again, with another cut on the cards for March

The first ECB Governing Council policy setting meeting of 2025 saw the central bank cut interest rates. It reduced them by 25bps, with the Deposit rate lowered to 2.75%, while the Re-fi rate was decreased to 2.90%. This marked the fifth 25bps rate cut since the ECB commenced its easing cycle in June of last year. Today’s decision by the ECB to cut rates was unanimous.