Dear Reader,

Today's overview of economic news and market action

• Mixed mood on markets throughout the European session yesterday …
• Market rate expectations hardened across the board …
• Current pricing suggests rate cuts worth 100bps in the EZ, 90bps in the US, and 65bps in the UK by year end …
• On the currency front the dollar and yen were on the defensive …
• This is reflected in EUR/USD opening at the midpoint of $1.08-1.09 & EUR/JPY up near the ¥163 threshold …
• EUR/GBP is in the top half of 85-86p …
• GBP/USD is in the upper half of $1.26-1.27 …
• Today, the flash PMIs for February in the EZ, UK and US are due …
• ECB meeting minutes are also in focus ….

The UK economy stuck in stagnation

A plethora of UK data last week provided conflicting evidence on the strength of the economy of late. For the optimists, continuing strength in the labour market and solid retail sales figures for January suggest the UK consumer is recovering some momentum. However, sticky inflation and moribund GDP growth point to a wider malaise in the UK economy.

UK data paint a muddled picture of the economy

A plethora of UK data this week provided conflicting evidence on the strength of the economy of late. For the optimists, continuing strength in the labour market and solid retail sales figures for January suggest the UK consumer is recovering some momentum.

Service sector growth slows to near-three year low

The first batch of AIB PMI® survey data for 2024 signalled a loss of momentum in Irish service sector activity, albeit still extending the current growth sequence that began in March 2021. Rates of expansion in total activity and new business both slowed on the month, with the former rising at the weakest pace in the current upturn.

ECB on hold for third straight meeting

The first policy setting meeting of the ECB’s Governing Council for 2024 saw the Central Bank maintain its key deposit rate at 4%.