The UK economy grew by just 0.1% in the final quarter of last year, missing market expectations of 0.2% and ending 2025 on a notably weak footing.
- Services (The Stagnation): The powerhouse of the UK economy flatlined at 0% growth. Business-facing activities stalled entirely, while consumer spending remains sluggish.
- Construction (The Drag): This sector was the morning’s biggest casualty, contracting by 2.1%. This marks its worst performance in over four years, driven by a persistent lack of new residential developments.
- Production (The Silver Lining): This was the lone bright spot, growing by 1.2%. Manufacturing – specifically the automotive sector – showed resilience as supply chains finally stabilized.
This morning’s data comes after a difficult week for the pound following the negativity surrounding domestic politics.
Later in the day, focus shifts to the US and Europe, several key data points could dictate the afternoon’s volatility.
At 1:30pm, the US will release its weekly Initial Jobless Claims, followed by Existing Home Sales at 3pm.
Following yesterday’s stronger-than-expected Nonfarm Payrolls, another robust jobs report could propel the US Dollar higher, further squeezing the Pound.
Isabel Schnabel, an influential member of the ECB Executive Board, is scheduled to speak. Markets are looking for clues on whether the ECB has truly reached a “rate floor” or if further cuts are on the table to stimulate Eurozone growth.