The pound is weaker against the dollar this morning following high US inflation figures last week and poor economic data released for the UK this morning.
UK GDP data shows that the economy shrank by 0.3% month-on-month in April, with declines seen in services, production and construction sectors. The war in Ukraine, a reduction in pandemic-related activity and other factors were cited as contributors to this.
The markets now look ahead to the Bank of England’s meeting on Thursday and will be listening to see if this latest data has any bearing on decisions. An interest rate hike of 25 basis points is expected.
The Federal Reserve will also hold its next monetary policy meeting this week. Following high inflation figures last week, expectations have risen for more aggressive action from officials.
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