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Cryptocurrency News Articles
Stronger-than-Predicted Q1 Growth Spurs Surge in British Pound
May 10, 2024 at 08:06 pm
The British pound gained against the U.S. dollar on Friday following the release of data revealing a stronger-than-anticipated 0.6% economic growth in the first quarter of 2023, surpassing recession forecasts. Despite a slight increase in May, the pound has faced a 1.5% decline this year due to the dollar's strength amid the robust U.S. economy.
Stronger-than-Expected Q1 Growth Buoys British Pound
London, May 10 (Reuters) - The British pound exhibited a positive surge on Friday following the release of robust economic data. The Pound Sterling has recorded a 0.6% increase in the first quarter of 2023, outperforming economists' expectations and allaying concerns of a prolonged recession.
The Office for National Statistics (ONS) reported that the United Kingdom's gross domestic product (GDP) expanded by an impressive 0.6% during the January-March period, surpassing the anticipated 0.4% growth predicted by a Reuters poll of economists. This expansion signals a promising start to the year, with analysts expressing cautious optimism.
Henry Cook, a senior economist at MUFG, stated that the UK economy has commenced the year with substantial momentum, suggesting that the recessionary period may be receding. This encouraging development has instilled confidence in sterling, contributing to its recent appreciation.
Against the Euro, the Pound has gained 0.1%, trading at 86.04 pence. The Bank of England (BoE) maintained interest rates at a 16-year high of 5.25% on Thursday, acknowledging positive trends in inflation. However, a deputy governor advocating for a rate cut has raised expectations that borrowing costs may begin to decline later this year.
Headline inflation decelerated to 3.2% in March from a peak of 11.1% in October 2022. The next inflation data release is scheduled for May 22 and is expected to provide further guidance on the BoE's monetary policy decisions.
"Today's GDP figures may prompt the BoE to reconsider its position, but the focus will remain on upcoming inflation and wage growth data," Cook remarked. "If these metrics continue to improve, the strong economic growth reported today may not be sufficient to halt the anticipated monetary easing."
On Thursday, Sterling experienced a 0.2% gain after data from the United States revealed a larger-than-expected increase in weekly jobless claims. This development has fueled speculation that the US labor market is weakening and that the Federal Reserve may reduce interest rates in the coming months.
Despite these positive developments, the US dollar has maintained its dominance in 2023, appreciating approximately 3.9%. The US economy's resilience has contributed to the dollar's strength. The US dollar index, which measures the dollar's performance against a basket of six major currencies, remained stable at 105.23.
Overall, the robust economic growth reported in the first quarter has instilled optimism in the UK economy and contributed to the recent appreciation of the Pound Sterling. However, the currency's strength in the coming months will depend on various factors, including the BoE's monetary policy decisions and inflation and wage growth trends.
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