UK GDP matches forecast

We haven’t seen any growth in the UK economy since September 2023 this morning’s data shows another contraction of 0.1% in the month of February. This was entirely in line with market forecasts, so the value of the pound was largely unaffected. We also had industrial production data for January which showed a small 0.2% contraction alongside manufacturing production for the same period, Which showed no growth whatsoever. Traders and investors are looking at the Bank of England I’m wondering why they’re keeping the cost of borrowing so high for so long, clearly inflicting damage on the UK economy. Sterling had a wobble against the US dollar relating to yesterday’s US inflation numbers but is generally steady around $1.28 but the pound is trying to push above EUR 1.17 again. As we have seen, the pound struggles to push above 1.1750. So we will watch any attempt to get to that level with a lot of interest.

Above forecast US inflation gives Fed a concern

US inflation came in above forecast and the annual rate of inflation in February at 3.2% stepped up from the January number of 3.1%. At a time when the markets are hoping the Federal Reserve will start cutting interest rates in the US, this does cost a darker shadow over that likelihood. The data was not far away from the market forecasts, so the lacklustre reaction in the financial markets is not so surprising. The GBP/USD rate did drop half a cent on the announcement but he’s bounced back to $1.28 this morning; roughly where it started the day yesterday. The EUR/USD rate has sort of mirrored that, with a 1/4 cent drop followed by a bounce back to this morning’s level of $1.0930. Whilst the US data diary is a little light today, we do have UK and EU data to Mull over.