Given recent fluctuations in the currency markets, it comes as little surprise that we’ve experienced a somewhat quieter week in terms of fluctuations. Geopolitics continues to dominate the landscape, but markets appear to be consolidating as participants await further clarity on tariffs and the broader impact on international trade.
With most of Europe and the UK observing a bank holiday on Monday, the week began slowly, with the first major data releases arriving on Wednesday. These included PMI Services and Manufacturing figures from the UK, Eurozone, and US. As all three are typically released on the same day, it’s uncommon for PMI data alone to cause significant market swings, though it remains a valuable gauge of economic health.
All major European releases remained below the critical threshold of 50. France reported the weakest figures, with Services at 46.8 and Manufacturing at 48.2. As anticipated, UK Manufacturing came in at a disappointing 44.0—the lowest of all the PMI releases—while Services unexpectedly fell below the key 50 mark. This was compounded by higher-than-expected Public Sector Net Borrowing, as well as an IMF statement warning that the UK would be the hardest hit by the global trade war. All in all, it was a challenging day for Chancellor Reeves.
The US managed to maintain its position above 50 in both PMI readings; however, the Services figure came in significantly lower than forecast.
Thursday was relatively uneventful, with the only notable release being US unemployment claims. Due to the frequency of this data, it rarely causes major market movement, and this week’s figure aligned closely with expectations. Meanwhile, geopolitical tensions continued as Russia’s ongoing bombing campaign in Ukraine drew sharp criticism from President Trump, who called for an immediate ceasefire.
Friday’s main highlight was the release of UK Retail Sales data. Following last month’s surprising 1.0% increase—despite forecasts predicting a -0.3% drop—analysts once again anticipated a decline of -0.3%. However, actual figures beat expectations once more, rising by 0.4%.
Looking ahead, the spotlight turns to the US, which will dominate the upcoming data calendar with a series of employment, growth, and inflation reports. Tariffs remain the key focus, with markets bracing for potentially significant moves as the situation continues to evolve.
