Stable Market Minute - 23rd February 2026: Tariffs Tension High

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Last week, the UK economy demonstrated resilience with a series of positive data releases. Inflation was reported at a favourable 3.1%, while January retail sales saw a notable increase of 1.8%. The Labour government also highlighted a record surplus for January, contributing to a generally optimistic economic outlook. Preliminary PMI data for February in both manufacturing and services sectors further underscored this sentiment. However, the unemployment rate remained at 5.2%, presenting a slight concern. Despite this, the Bank of England is likely to view these developments positively, with market speculation still favouring a potential rate cut in March.

Meanwhile, across the Atlantic, the US faced a significant legal ruling as the Supreme Court declared Trump's tariff plans illegal late on Friday. In response, Trump escalated global tariffs to 15% over the weekend. This move initially caused market jitters, though sentiment has since stabilised. The frequent reversals in tariff policy have led to some market fatigue.

The US economy also reported sluggish Q4 GDP growth of just 1.4%, largely attributed to the government shutdown. Currency markets have seen little movement, with GBP/EUR trading at 1.1450 and GBP/USD steady at 1.35.

Looking ahead, the European Central Bank is scheduled for a speech today, while Friday will bring preliminary German inflation data for February and US inflation figures for January. These releases are anticipated to provide further insight into the economic trajectory on both sides of the Atlantic.

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