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11/07/24
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GBP Reaches 4-Month Peak After Strong GDP
On Thursday, the British pound managed to extend its gains, and GBP/USD traded at about 1.2876, up 0.22% for the day in the European session.
Today the sun was shining in London and there’s lots to be happy about besides the pleasant weather. England has reached the final of the Euro football tournament and GDP in the UK was stronger than anticipated. The British pound rose and has reached its highest level since Mar. 8.
The UK economy is showing indications of rebounding after dropping into a recession in the last part of 2023. May GDP jumped 1.4% annualized, up from April’s revised 0.6% and higher than the market estimate of 1.2%.
GDP improved to 0.4% monthly after no growth in April and was higher than market estimates of 0.2%.
The improved data was partly due to the weather. It was unusually rainy in April, which hampered consumer spending. May was however the warmest on record and this revitalized retail sales.
Inflation has dropped dramatically, to 2% in May from 11.1% in Oct. 2022, matching the BoE’s inflation target. Although this has increased expectations that the BoE will cut rates, the central bank is still cautious. Markets expectations are 50/50 on whether the BoE will lower rates on August 1.
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