A report from the European Union statistics agency, Eurostat, has said that retail sales fell sharply across the Eurozone in the Christmas period, with German sales falling the most. December's sales fell by 1% across Europe, compared to a year ago, and by 1.6% compared to the previous month, worse than analysts had expected.

"I can't say that deflation is a likely prospect, but it's a bigger risk than it was just two months ago. It will highlight the pressure on the ECB," said Peter Dixon at Commerzbank. "It's possibly another piece of the jigsaw that says a rate cut, if not tomorrow then probably next month," he added.