The UK calendar includes the Spring Statement, final PMI readings, the February Decision Maker Panel (DMP) survey, BRC Shop Price Index data, and the January consumer credit release.<\/p>\n
Net consumer credit is forecast to rise to \u00a31.7bn. Mortgage approvals are expected to recover to 64.5k after a fall in December.<\/p>\n
The manufacturing PMI is expected to remain at 52.0. The services PMI is expected to remain at 53.9, while construction is forecast to improve to 48.5.<\/p>\n
The DMP survey is expected to show lower output price expectations at 3.4%. Wage growth expectations are projected to ease to 3.5%.<\/p>\n
Firms\u2019 CPI expectations are expected to soften in both the near term and medium term. Employment expectations are expected to post another negative reading.<\/p>\n
The BRC Shop Price Index will be watched after an increase in January. Focus will be on discounting and promotions, especially for food.<\/p>\n
We are seeing a complex but manageable picture for the UK economy, making derivatives a key tool for navigating the outlook. The rebound in mortgage approvals and consumer credit that we saw beginning early in 2025 has kept a floor under the housing market and retail sectors. This resilience suggests continued opportunities in call options on specific homebuilder and retail stocks that are outperforming the broader market.<\/p>\n
The softening inflation expectations we anticipated last year have largely come to pass, with the most recent January 2026 CPI figure holding steady at 2.5%, just above the Bank of England’s target. This sustained cooling, alongside moderating wage growth, strengthens the argument for the Bank to consider its first rate cut by the third quarter. Traders should therefore be looking at interest rate futures to price in a more dovish policy path for the second half of the year.<\/p>\n
While manufacturing and services PMIs showed solid expansion throughout 2025, providing support for UK equities, the labour market is the main point of weakness. The negative employment expectations we monitored have translated into a slowing jobs market, with the unemployment rate recently ticking up to 4.4% in the latest data. This divergence between business activity and employment creates a challenging environment for the British Pound, suggesting that using currency options to hedge against sterling weakness is a prudent strategy.<\/p>\n
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