UK Inflation and Eurozone PMIs in Focus

A fairly volatile start to the week in Europe could well continue on Tuesday as we get a number of key data points from both the euro area and the U.K., while trade is likely to remain light in the run up to the Easter Bank Holiday weekend.

Manufacturing and services PMI data for Germany, France and the eurozone will be released throughout the morning and is expected to paint quite a bleak picture. This is likely to be particularly the case for the manufacturing sector, which has already suffered considerably as a result of the slowdown in emerging markets, most notably China.

The Japanese manufacturing PMI, released overnight, didn’t offer much hope having fallen back into contraction territory, as the new orders component slipped to 45.9, the sharpest contraction in more than three years. The slowdown in emerging markets, particularly China, is likely to be behind this steep contraction in export orders, which doesn’t bode well for the eurozone ahead of its PMI data.

ZEW economic sentiment and Ifo business climate surveys should shed additional light on the German economy today. While both surveys are expected to indicate a small improvement in sentiment, they are coming off the lowest levels since the end of 2014 so don’t offer much cause for optimism at this stage.

In the U.K., focus will be on the inflation data which is expected to show price pressures remaining very subdued. Even the core reading is seen remaining at 1.2%, which is well below the Bank of England’s 2% target. Still, this has very gradually risen from 0.8% last summer and is likely to continue to do so at a fairly slow pace making any further monetary easing from the BoE unnecessary. Similarly, the start of the tightening cycle isn’t likely any time soon either, especially with the U.K. vote on EU membership due in three months time.

For a look at all of today’s economic events, check out our economic calendar.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.