The euro stands to lose the most in a week headlined by economic data and another interest rate decision from the European Central Bank (ECB). Threats of tariffs from the United States can be added to the worry list, along with the almost complete pivot in transatlantic relations that left Europe stunned.
After unprecedented drama in the White House, it was little wonder attention drifted away from economics. European leaders met on Sunday for a high-profile show of solidarity with Ukraine, as well as to discuss future security requirements without the implicit support of the United States. Adjusting to a new geopolitical backdrop will take time, but the one benefit of American foreign policy has been its galvanising effect on European defence efforts.
All this didn’t stop the usual flow of data, of course. German inflation rose to 2.3% in January, a shade more than had been expected. As if to underscore just how tough the job of a European central banker is, headline inflation in France slumped to 0.8% in the same period, well below the 2% target.
Some interesting GDP figures were released at the tail end of last week. Canada, much derided in recent weeks by Donald Trump as the “51st state”, grew its economy by an annualised 2.6% in the last three months of 2024.
India’s economy grew at an annualised rate of 6.2% in the final quarter of 2024, slightly below forecasts of a 6.3% expansion. If that number seems eye-wateringly high, it’s worth remembering that the economy grew at a rate of more than 10% across 2022.
While Sir Keir Starmer got through last week’s meeting with Donald Trump largely unscathed, his decision to cut aid to boost defence spending had consequences within his cabinet. International development minister Annelise Dodds resigned on Friday, citing inevitable cuts to projects in Ukraine, Gaza and Yemen.
The week ahead is chock-a-block with impactful economic events. The biggest of these is the European Central Bank’s next interest rate meeting, where it is expected to announce a sixth interest rate cut in nine months.
Things are more sedate for the UK but remain busy in the US. Manufacturing and services data, non-farm payrolls and unemployment will all flash across the ticker before the week is out.
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