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The UK's dominant services sector did not perform as well as first thought last month.
Sterling’s strong start to 2026 hit its first real bump on Tuesday, as a downward revision to December’s PMI data opened the door for the US dollar to claw back half a cent.
S&P revised down its initial 52.1 score in the UK services PMI study to 51.4. The US dollar was also impacted by some Federal Reserve chatter, and while that was mixed, some indications of a dovish slant helped the US dollar and lifted stock markets toward fresh highs.
The highlight of yesterday’s economic data schedule was Germany’s consumer price inflation report for December. That showed a sharp fall in the headline rate of inflation – down to 1.8% from 2.3% a month earlier.
It was another giddy day in wider markets, which have opened this year in roaring fashion. London’s FTSE index and Japan’s Nikkei posted daily gains of over 1%. There were smaller gains in New York for the S&P 500 and the tech-heavy Nasdaq.
Amundi, Europe’s largest money manager, would pour a little ice on that fire with a warning over tech valuations. “Whether there are excesses . . . in the equity market on AI is no longer questionable”, chief investment officer Vincent Mortier told the Financial Times.
As you might expect, things remained frantic in the geopolitical sphere after last weekend. Europe’s leaders rallied to support Greenland (and by extension Denmark) over any expansionist claims by the United States. But while there was discord there, reports suggested President Trump was willing to agree to the European framework for peace in Ukraine.
Brent crude saw Monday’s gains slip away yesterday, falling further last night after Trump tweeted that Venezuela would turn over “between 30-50 million barrels” of oil to the US.
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GBP: Long wait ahead
While its rivals are coming out the gate fast with fresh data, the pound might have to wait a while longer for insight into the UK economy. Sterling’s next real report of note comes at the tail end of next week in the form of GDP numbers.
GBP/USD: the past year
EUR: A sign of things to come?
Germany and France were the first eurozone nations to report inflation numbers this year. Both recorded month-on-month falls (a steep one in Germany’s case), but will that trend continue as the unified inflation read arrives later this morning?
GBP/EUR: the past year
USD: Boosted ahead of data flood
The US dollar index, a measure of the greenback’s strength against six prominent rivals, rose by nearly 0.3% yesterday. That was despite mixed PMI data, which indicated the focus remained on the Federal Reserve and its list of speakers along with a hectic streak of economic indicators, beginning today with the JOLTs job report.
EUR/USD: the past year
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