Today’s news headlines:

‘UK consumer spending slumps during latest lockdown’. Spending patterns of UK consumers revealed that retail sales fell in January at the fastest rate since last May, suggesting the latest lockdown has hit the economy harder than thought. Consumer spending fell 16.3% in January 2021 compared to January 2020 according to data that tracks nearly half of all UK credit and debit spending. The head of the British Retail Consortium said that ‘the current lockdown has hit non-essential retails harder than in November, with the new variant of the virus hampering consumer confidence and leading customers to hold back on spending’. (Financial Times)

‘Senior Fed official shrugs off inflation risks from stimulus plan’. In an interview with the Financial Times, Tom Barkin, president of the Richmond Fed, downplayed the risks on an inflationary jump from further fiscal stimulus. Barkin suggested that he sees deflationary risks on the horizon over the medium-term because of globalisation and technology, which will help keep prices subdued despite short-term increases that might be brought on by pent up demand. Meanwhile, a debate in Washington rages over whether Joe Biden’s $1.9tn stimulus package might overheat the US economy, with Treasury Secretary, Janet Yellen quick to dismiss those concerns. (Financial Times)

Today's events, rates, and data 

• Markets were broadly positive overnight following yesterday’s risk rally, with the Pound and Euro both gaining on the US Dollar. With little data out today, sentiment will continue to drive markets, with the 1.38 level back in scope for Cable.

Today's events

UK BRC Sales Monitor: 7.1% vs 4.8% previously
New Zealand Inflation Expectations: 1.89% vs 1.59% previously
Italian Industrial Production: 9.00am

Interbank rates

GBP/USD: 1.3780
GBP/EUR: 1.1405
EUR/USD: 1.2085
USD/CAD: 1.2725