This week's UK economic data has exceeded expectations, with business activity expanding and confidence surveys showing stronger results than anticipated. This positive growth outlook may lead to increased inflation and potentially longer periods of higher rates.

The Bank of England is expected to raise rates by 0.25% in March, bringing them up to 4.25%, with the possibility of one more hike in May before they reach their peak.

In the US, data is still strong, and the Federal Reserve's recent minutes show that they are more concerned with inflation than recession. This suggests that further rate hikes are expected in the upcoming months, with rates potentially peaking around 5.35% mid-year.

Similarly, in Europe, survey data has surpassed expectations, leading to predictions of a 0.50% rate hike in March and additional increases in the future as the central bank remains committed to reducing inflation.

Despite these positive economic developments, global geopolitical tensions continue to increase, causing a decline in market sentiment and risk appetite. This week, China and Russia have raised the rhetoric, adding to the uncertainty.

In the foreign exchange markets, there is a lack of momentum and conviction in any significant trends due to the uncertain backdrop. GBP/USD is experiencing ongoing demand below the psychological level of 1.2000 and is expected to receive significant support at 1.1750. Meanwhile, GBP/EUR has risen due to strong UK data, but it remains within the established range of 1.1000 to 1.1500.