Sterling softer after UK data

Sterling has lost ground against the euro and (particularly) the dollar following the release of weaker than expected UK economic data yesterday, and trades at around 88p and just over $1.29 respectively, the latter now well down from its 2019 high of over $1.32. The single currency has also given up ground to the dollar to trade just below $1.14 this morning (that’s down from over $1.15 late last week)

Equities advanced yesterday, with both European and US stocks ending higher on the day, though bond yields in the core markets still edged down led by the UK (with 10-year yields about 5bps lower at a touch over 1.21%

The composite PMI in the UK fell to 50.3 in January, its lowest level since July 2016, just after the EU referendum, suggesting (according to the people that compile the index) “that the UK economy is at risk of stalling or worse” amid “escalating Brexit uncertainty”

In the Euro area, the final reading for the January composite PMI was revised up a touch to 51.0, though this still suggests that the “eurozone has started 2019 on a flat note, with growth close to stagnation” and  “indicates that GDP is growing at a quarterly rate of just 0.1%, setting the scene for the region’s worst quarter since 2013”

In contrast, the composite PMI in the US held broadly steady at 54.4 last month, indicating “robust economic growth”. In his State of the Union address, Donald Trump said the US had the “hottest” economy in the world – hyperbole perhaps, but it is currently doing better than its UK and Euro area counterparts

Data due today includes the trade balance and productivity in the US