DERBYSHIRE GB / APR 11 - This is the Pound Sterling Forex Reference and it is intended to be used as a guide to aid in your analysis. It contains factual information that has been researched from official sources as well as market commentators.
THE BANK OF ENGLAND
POLICY (MARCH)
On the 23rd of March, the Bank Rate was hiked by 0.25 to 4.25 percent
This matched the market expectations but was lower than the 0.50 hike at the February meeting
This is the eleventh consecutive rate hike and borrowing costs are at levels not seen since 2008
UK inflation rose unexpectedly in February although the projections remain to indicate a sharp fall through the year
The next meeting is on Thursday the 11th of May
The Bank of England is the Central Bank of the United Kingdom and monetary policy decisions are made by the nine members of the Monetary Policy Committee. Sources: The Bank of England, Trading Economics
MONETARY POLICY REPORT (FEBRUARY)
GB ECONOMIC INDICATORS
GDP GROWTH RATE
Three Months to December (Q4) report came in at an expansion of 0.1 percent (final) which is higher than the 0.0 percent expected
Higher than the contraction of 0.1 percent in Q3 (revised up from -0.2)
MPC 2024 projection is for a fall to a 0.7 percent contraction after being raised from the previous projection of -2.0
Trading Economics Q2 forecast is for a small rise to 0.2 percent which has been maintained from the previous forecast
The Q1 2023 Preliminary report is out on the 11th of May
Measures the quarter on quarter change of the inflation-adjusted value of produced goods and services. Sources: Office for National Statistics, Trading Economics
CONSUMER PRICE INDEX
Twelve Months to February report came in at 10.4 percent inflation which is higher than the 9.9 percent expected
Much higher than the 10.1 percent inflation in December
MPC 2024 projection is for a fall to a 3.0 percent inflation which has been lowered from the previous projection of 4.0 percent
Trading Economics Q2 forecast is for a small rise to 10.2 percent which has been maintained from the previous forecast with a fall to 2.5 next year in 2024
The March report is out on the 19th of April
Measures the yearly change in the price of goods and services purchased by consumers. Sources: Office for National Statistics, Trading Economics
UNEMPLOYMENT RATE
Three Months to January report came in at 3.7 percent which is slightly lower than the 3.8 percent expected
Matched the 3.7 percent for December
MPC projection is for a climb to 4.4 percent which has been lowered from the previous projection of 5.2
Trading Economics Q2 forecast is for it to climb slightly to 3.8 percent which has been maintained from the previous forecast and then rising to 5.0 percent in 2024
The February report is out on the 18th of April
Measures the number of people actively looking for a job as a percentage of the labour force. Sources: Office for National Statistics, Trading Economics
GB MARKET NARRATIVES
ECONOMIC GROWTH
WHAT’S HAPPENING: The UK is lagging its G7 counterparts (and even the G20) when it comes to a post pandemic recovery with regards to the GDP Growth Rate forecasts (by Trading Economics).
WHY IS IT HAPPENING: The UK saw a difficult end to 2022 with the Truss Government failure causing a collapse of Sterling and surge in yields. The situation on that front has since improved thanks to the more fiscally responsible PM Sunak and Chancellor Hunt taking charge. Further headwinds to overcome are striking trade unions, inflation, tighter credit conditions and the cost of living crisis.
EFFECTS ON THE MARKET
A higher than expected growth rate will see optimistic sentiment and result in upside Sterling and FTSE 100 with downside Gilt yields.
A lower than expected growth rate will see pessimistic sentiment and result in downside Sterling and FTSE 100 with upside Gilt yields.
Jeepson Trading is a currency focused fund, managed by Gavin Pearson in the UK - all trading decisions are made at your own risk.
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