GBP: Today’s stellar PMI report will see the Bank of England refrain from lowering interest rates at the January meeting.
In the wake of the release the Pound came under pressure in a “buy the rumour, sell the fact” type fashion with market participants anticipating a better release amid the recent sentiment surveys.
So, money markets are little changed a still price in a 50% likelihood of a cut. This in turn could see the Pound push higher if the BoE stands pat on policy.
EUR: German PMIs further echoed the stabilisation in Eurozone data.
However, focus will be on Italy, where a regional election could see political uncertainty pick up in the region.
Crude Oil: Oil prices have continued to decline and is on course for its largest drop since September 2018.
Supply disruption risks from Libya and OPEC jawboning have failed to provide support.
The impact of coronavirus on the oil market is difficult to assess, so focus will be on China’s ability to contain the virus.