EUR, GBP flows: European manufacturing PMIs revised lower

Eurozone manufacturing PMIs for December have been revised a little weaker, but the Eurozone money and credit data are marginally stronger than expected. There is little net implication for the EUR at this stage. The EUR curve doesn’t currently suggest any change in rates over the next year, but we continue to see some scope for further rate cuts (see https://continuumeconomics.com/a/e02b8cc2), but this will require evidence of inflation dropping below target.

UK PMI has also been revised lower, but is still up on the month. This may be supportive for GBP even though we regard the UK manufacturing PMI data with deep suspicion, as there is little if any correlation between UK manufacturing PMI and the UK manufacturing output data.