Welcome to Extreme Investor Network, where we bring you unique insights and valuable information about the stock market, trading, and all things Wall Street. Today, we are diving into the recent economic data coming out of the UK and its impact on the Bank of England’s monetary policy.
According to the Office for National Statistics, the services sector output in the UK increased by 0.7% quarter-on-quarter in Q1 2024, marking the first time it has risen since Q1 2023. Production also saw growth of 0.8%, with manufacturing leading the way. However, the construction sector contracted by 0.9%. Household consumption, net trade, and government spending were key drivers of the GDP numbers, with household consumption increasing by 0.2% in Q1.
In March, the UK economy saw a 0.4% expansion, exceeding expectations after a 0.1% growth in February. This positive economic data has implications for the Bank of England’s monetary policy decisions.
The Bank of England recently voted to keep interest rates unchanged at 5.25% in a 7-2 decision. While the GDP numbers were promising, the central bank remains focused on managing inflation. The positive economic data raises questions about concerns regarding economic slack, but inflation remains a key consideration for the BoE.
In the currency markets, the GBP/USD pair reacted to the UK GDP report with some volatility. Prior to the data release, the pair hit a high of $1.25295 before dropping to $1.25119. Following the GDP report, the GBP/USD fell to $1.25137 before surging to $1.25400. As of Friday, the GBP/USD was up 0.13% to $1.25400.
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