Tuesday brought Construction PMI figures were published. January data pointed to a renewed slowdown in output growth across the UK construction sector. At 55.0, down from 57.8 in December, the headline seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index remained well above the 50.0 no-change value, but signalled the slowest rate of expansion since April 2015. Analysts were anticipating smaller decrease to 57.6. Moreover, aside from the pre-election slowdown recorded last year, the latest reading was the lowest since June 2013. A number of survey respondents noted that softer new business growth had acted as a brake on output growth and staff hiring at the start of 2016.

 

Wednesday's session brought UK Services PMI data. The current period of rising UK service sector output was extended to over three years in January, as signalled by the Business Activity Index remaining above the no-change mark of 50.0. The index was little-changed from December’s 55.5, at 55.6, and broadly in line with the average over the second half of 2015. Growth in January was slightly stronger than the long-run survey average, but weaker than the strength achieved in 2013 (56.9), 2014 (58.2) and 2015 (56.7).

 

Focus of Thursday's session was on BoE interest rate decision and the following Minutes.Bank of England policy maker Ian McCafferty dropped his call for an interest-rate increase as officials cut their growth and inflation forecasts and signaled borrowing costs will stay low. The Monetary Policy Committee led by Governor Mark Carney left the benchmark at a record-low 0.5 percent, as the nine-member panel voted unanimously for the first time since July last year. While the rate outcome was forecast by all economists in a Bloomberg survey, just three out of 25 predicted the vote switch. 

 

The February decision was published in London alongside new economic projections showing inflation will remain below 1 percent until the end of the year. “The MPC judges the risks to the central projection to be skewed a little to the downside in the near term, reflecting the possibility of greater persistence of low inflation,” the committee said on Thursday. “Low realized inflation will continue to moderate the increase in wage pressure in the near term.”

 

This week markets will be looking at:

 

Trade Balance (Tuesday 10:00)

Industrial Production (Wednesday 10:30)