Market news
19.02.2021, 13:37

European session review: GBP mixed, as investors digest a batch of important economic data from UK

TimeCountryEventPeriodPrevious valueForecastActual
07:00GermanyProducer Price Index (YoY)January0.2%0.3%0.9%
07:00GermanyProducer Price Index (MoM)January0.8%0.8%1.4%
07:00United KingdomRetail Sales (YoY) January3.1%-1.3%-5.9%
07:00United KingdomRetail Sales (MoM)January0.4%-2.5%-8.2%
07:30SwitzerlandIndustrial Production (YoY)Quarter IV-4.4% -3.8%
07:45FranceCPI, y/yJanuary0%0.6%0.6%
07:45FranceCPI, m/mJanuary0.2%0.2%0.2%
08:15FranceManufacturing PMIFebruary51.651.455
08:15FranceServices PMIFebruary47.34743.6
08:30GermanyServices PMIFebruary46.746.545.9
08:30GermanyManufacturing PMIFebruary57.156.560.6
09:00EurozoneCurrent account, unadjusted, bln December27.3 51.9
09:00EurozoneManufacturing PMIFebruary54.854.357.7
09:00EurozoneServices PMIFebruary45.445.944.7
09:30United KingdomPurchasing Manager Index ServicesFebruary39.54149.7
09:30United KingdomPurchasing Manager Index Manufacturing February54.153.254.9
11:00United KingdomCBI industrial order books balanceFebruary-38-35-24
13:00U.S.Fed Barkin Speech    
13:30CanadaRetail Sales, m/mDecember1.3%-2.5%-3.4%
13:30CanadaRetail Sales YoYDecember7.5% 3.3%
13:30CanadaRetail Sales ex Autos, m/mDecember2.1%-2%-4.1%


GBP traded mixed against its major rivals in the European session on Friday as investors assessed a slew of mixed economic data from the UK, while the country’s successful Covid-19 vaccination rollout continued to support the pound. It rose against USD, EUR, JPY and CHF, but fell against AUD, NZD and CAD.

Data from the Office for National Statistics (ONS) showed British retail sales fell much more than forecast in January as non-essential shops went back into nationwide coronavirus lockdown. According to the report, retail sales in the UK slumped 8.2 percent m/m in January 2021 (the most since a record 18 percent m/m plunge in April 2020), following a 0.4 percent m/m advance seen in December 2020. Economists had forecast a 2.5 percent m/m decline. In y/y terms, retail sales decreased 5.9 percent in contrast to a 3.1 percent gain in the previous month. This was the biggest fall since May 2020. Economists had expected a drop of 1.3 percent.

Flash readings of business activity data indicated only a fractional decrease in the UK private-sector output in February, largely reflecting a near-stabilization in service activity amid continuing growth in manufacturing. According to IHS Markit’s report, the IHS Markit/Chartered Institute of Procurement & Supply (CIPS) UK Composite PMI climbed to 49.8 in February from 41.2 in January, approaching close to a 50.0 no-change threshold. The score was predicted to increase only to 42.2. The IHS Markit/CIPS UK Services PMI rose to 49.7 in February from 39.5 in the previous month, exceeding economists' expectations of 41.0. The reading signaled the softest rate of decline since the current phase of contraction began in November 2020. At the same time, the IHS Markit/CIPS UK Manufacturing PMI rose to 54.9 in February from 54.1 in January, also beating economists’ forecasts of 53.2. 

Meanwhile, the latest survey by the Confederation of British Industry (CBI) revealed that the UK manufacturers' order books improved in February to a similar position as in December 2020. According to the report, the CBI's monthly factory order book balance increased to -24 in February from -38 in the previous month but remained well below the long-run average of -14. Economists had forecast the reading to come in at -35. 

Market participants also digested the remarks of the Bank of England's (BoE) policymaker Gertjan Vlieghe, who suggested that the BoE might need negative rates later this year or in 2022 if Britain’s economic recovery disappoints. However, if the economy evolves broadly in line with BoE’s latest projections, it is likely that no further monetary stimulus is required, he said.

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