This week saw more weakness in manufacturing, in hard data and surveys, but solid retail sales and an ever-tightening labour market have pushed longer-dated yields up. The data and the rate move have supported the USD but looked at in this way, the impression is that there is potentially more to go. The Dollar’s bounce isn’t necessarily over yet. 

As for the UK, we’ve seen enough softness in labour market and retail sales data this week that further downside in EUR/GBP is very limited, and there is room for GBP/USD to drift to 1.2500 before we get the mid-February UK data blast.