EUR: Factory floor recovery
There’s a quiet turnaround happening in eurozone manufacturing. The flash PMI crossed back into expansion territory for the first time since mid-2022, led by Germany, where factory output grew for the first time in over three-and-a-half years. Business confidence in Europe’s largest economy hit a six-month high too, with export expectations turning positive for the first time since last summer. Inflation, meanwhile, continues to fall. The final January reading came in at 1.7% – comfortably below the ECB’s 2% target. Tomorrow’s national prints from Germany, France and Spain will be closely watched. If they come in soft again, the debate over whether the ECB should resume cutting rates will only get louder. The EU’s decision to pause ratification of its US trade deal adds another layer of uncertainty for the bloc.
GBP/EUR: the past year
