Mixed data out of the UK
UK inflation in February unexpectedly missed expectations by quite a margin (0.8% v 0.4%) and has contributed to a weaker £ today. The undershoot has been blamed mainly on the clothing retail market, that failed to raise prices after the January sales. The soft reading means we are further away from the BoE's 2.0% target and also the raising of interest rates. But, analysts believe this to be just a blip and expect from April onwards, for there to be a surge in inflation (good for the £).
The EU (well mainly Germany) produced some positive March PMI figures today with manufacturing output seeing a record increase. Germany hit its highest reading in 37-months for manufacturing and also blew away forecasts in services and composite data to help the €. The EU's services sector remains a weak spot for the economy though due to ongoing restrictions and the overall outlook continues to remain uncertain.
The UK produced its own impressive data too with much stronger than expected PMI's for March. All three components easily beat estimates again and reported better than February's positive figures. The bounceback in activity is well and truly on and much faster than expected which is great news for £ and the UK. There was encouraging jobs data on Tuesday as well with the unemployment rate actually falling. The uptick in employment in March represented the first rise in staffing numbers since February 2020 and the rate of job creation was the fastest for nearly two years.