Yesterday, we saw the market return to full liquidity following the festive break. The newswires were dominated by the escalating tensions in the Middle East following the death of General Qasem Soleimani, during a US sanctioned air strike. Looking to the day ahead, this will remain the focal point for financial markets.
Sterling Trading Higher as UK PMI Markit Services Reading is Revised Up
Yesterday, the UK December PMI services-sector index was revised higher to 50.0 from the flash reading of 49.0. This release equalled a 6-month high, although it still signalled stagnation. A promising component of the reading was that new orders increased at the fastest pace for six months and business confidence hit a 15-month high, this helped give Sterling a boost. From a Brexit perspective, Prime Minister Johnson’s spokesman reiterated that there would be no extension to the UK implementation period, giving the UK a limited amount of time to negotiate a trade deal with the European Union.
Today, MPs return following the Christmas recess; the passage of the EU Withdrawal Bill on the agenda.
Eurozone Consumer Price Index Reading Today
There was also some positive news in Europe as their PMI services index was revised higher to a 4-month high of 52.8 from the flash reading of 52.4. Like the UK, new business also expanded slightly for the month and employment edged higher.
From a data perspective, Eurozone inflation has been trending well below the target rate of 2%. Today we have the “Flash” reading (2 versions of report – two weeks apart). The market will be keen to see if there has been any improvement to the picture.