Home Daily Commentaries UK economy grew by 0.7% in Q1

UK economy grew by 0.7% in Q1

Daily Currency Update

The UK economy expanded by 0.7% in Q1, surpassing initial estimates of 0.6% and marking the strongest growth in over two years. On the inflation front, headline inflation fell to the Bank of England's (BoE) target of 2%, providing a favorable economic backdrop. Despite this, the BoE decided to keep interest rates unchanged, which has led to increased speculation about a possible rate cut in August, based on recent comments from policymakers.

On the political front, Britain is poised for a significant shift ahead of the July 4 elections. Polls are predicting a landslide victory for Keir Starmer’s Labour Party and a substantial defeat for Rishi Sunak’s Conservatives, potentially ending their 14-year tenure in power. This anticipated political upheaval adds an extra layer of uncertainty to the economic outlook.

Key Movers

The US dollar is set for a second consecutive quarterly gain on Friday, reaching a near four-decade high against a basket of major currencies. This surge has been driven by robust economic indicators and investor anticipation of crucial U.S. inflation data due for release.

The upcoming inflation report is highly significant, as it will provide insights into price pressures and potentially influence the Federal Reserve's monetary policy decisions. Traders are closely monitoring this data to gauge the future direction of interest rates, a key factor in the dollar's sustained strength. The strong performance of the dollar underscores its safe-haven appeal amidst global economic uncertainties and expectations of continued economic resilience in the United States.

Expected Ranges

  • GBP/USD: 1.2605 - 1.2685 ▼
  • GBP/EUR: 1.1805 - 1.1865 ▲
  • GBP/AUD: 1.9005 - 1.9085 ▼
  • EUR/USD: 1.0655 - 1.0715 ▼

Written by

See Wah Li


See Wah is passionate about supporting positive transformations when it comes to managing foreign exchange. As a Senior Currency Consultant at OFX, his goal is to help businesses make informed decisions, alleviate risks, and enhance their currency strategies for success. With over 6 years of experience in the foreign exchange market, See Wah’s strength lies in developing effective solutions to help navigate the complexities of currency fluctuations and mitigate their impacts on business profitability.