Economic Update

16 February 2026

UK data deluge to shape expectations for the BOE

The UK enters an important run of releases this week, with policymakers likely to scrutinise the data as they prepare for March’s Monetary Policy Committee meeting. Last week’s Q4 GDP figures disappointed, largely due to weak services and construction output. Markets now look for signs of improvement across a broad set of indicators.

The week begins with labour market data, which has shown early signs of stabilisation. Vacancies appear to have levelled off, although the more meaningful signals for the BoE will come from the split between public and private sector wage growth and from HMRC payrolled employee numbers for January.

On Wednesday, the January CPI, RPI and PPI reports follow. Inflation has eased steadily since late summer, and forecasters expect a further decline in both headline and core CPI. Toward the end of the week, January public finances, retail sales and preliminary February PMIs all feature. Markets will look for an improving budget position, a rebound in retail volumes and tentative strengthening across the services and manufacturing sectors.

For sterling, this concentration of data could generate volatility without providing material direction. If inflation continues to soften, it may reinforce expectations for monetary easing later this year.

Eurozone industrial production and PMI signals in focus

This week, eurozone data on industrial activity will focus on not if, but by how much, it contracts by. The scale of the weakness is important for future interest rate decisions.

Survey data introduces slightly more uncertainty. Germany’s ZEW index may show further gradual improvement from a low starting point. The PMI releases at the end of the week could point to modest recovery after several subdued quarters, although progress remains slow and uneven.

The euro has held up reasonably well against most major currencies, despite slipping against the yen and Canadian dollar in recent weeks. Domestic data this week may support a period of consolidation rather than prompt a more decisive shift.

US dollar waits for GDP to offer clearer direction

Recent US data delivered a complex picture. Headline payrolls strengthened, although significant downward revisions to previous readings tempered that signal. December retail sales came in weaker, while inflation printed slightly below expectations. Together, these releases increased the pressure on the Federal Reserve to consider rate cuts at its March meeting, although market pricing remains more cautious.

This week brings several notable events: January industrial production, the minutes from the Federal Open Market Committee’s January meeting and, at the end of the week, Q4 GDP. Recent comments last week from President Trump suggested the potential for exceptionally strong growth, although consensus expectations sit closer to a still‑robust 3 percent annualised pace. Upside risk exists, but not to the levels some have speculated.

A stronger GDP figure could offer the dollar some support, though a significant reversal of recent moves appears unlikely. With US markets closed for Presidents’ Day today, trading may start slowly.

Canada and Mexico data likely to provide background support

The Canadian dollar and Mexican peso continued to consolidate recent gains last week. The peso briefly traded below 17.20 and moved toward its January lows around 17.10. The Canadian dollar paused after a period of appreciation, though it remains on a downward trend from February 2025’s highs.

Both currencies enter a relatively quiet data week. Canada’s CPI for January is expected to match December’s readings, while retail sales may soften slightly after strong November figures. Mexico’s retail sales may also pull back, though the broader recovery trend remains intact.

With limited catalysts, both currencies appear likely to continue consolidating rather than appreciating further against the USD.

Author 

Views expressed in this commentary are those of the author, and may differ from your appointed Moneycorp representative. This commentary does not constitute financial advice. All rates are sourced from Bloomberg and forecasts are taken from Forex Factory.