UK GDP Growth And US Inflation Affect GBPUSD
London: 12 January 2024 (TraderMade): The UK economy bounced back in November, exceeding expectations with a 0.3% growth. So, the UK economy takes a breather after a strong November, but the jury's still out on a full recovery. Meanwhile, Uncle Sam's inflation surprise throws a wrench in hopes of a quick Fed rate cut.
The GBPUSD pair declined by 0.31% to 1.27235 ( at about 12:17 PM GMT)
Key takeaways
- The UK economy shows signs of life, but the long-term outlook is uncertain.
- BoE faces a delicate balancing act between inflation and growth.
- US inflation surprise jolts markets, raising doubts about near-term rate cuts.
- The Fed remains committed to curb inflation to target, even if it takes longer.
The UK GDP On A Rise
The UK economy bounced back in November, exceeding expectations with a 0.3% growth. However, the three-month outlook remains shaky, potentially pointing to stagnation. The Bank of England faces a tough choice: keep rates high to tame inflation or lower them to boost growth.
US Inflation Spikes
US inflation unexpectedly spiked to 3.4%, dampening hopes for a smooth decline. While the Fed is on the right track, sticky services, and housing prices make the final leg of the inflation fight tricky. Markets are now less confident about a March rate cut, with the Fed pushing back against such expectations.
The global economic picture remains cloudy. The UK's fragile recovery faces inflation and recession threats, while the US grapples with persistent price pressures that may delay rate cuts. Market participants and policymakers will watch closely as these key stories unfold in the coming months.
