Sterling’s recovery from its post-interest-rate-decision drop lasted until yesterday afternoon, when comments from Bank of England monetary policymakers set it back. However, not before it had regained much of what had been lost since the start of the month.
The pound ended yesterday close to 2% stronger against the euro than the start of the week and 0.5% up on the US dollar. This morning’s ambiguous GDP data has left the market largely unmoved, so far.
ONS figures released at 7am showed a decisive fall in GDP of 0.5% in December. This was more than expected but not enough to push the quarterly figure below zero. The British economy therefore avoids being in a technical recession (two consecutive quarters of GDP falls), despite, as the National Institute of Economic and Social Research pointed out yesterday, millions of households feeling like they’re in one.
Yesterday afternoon the Bank of England (BoE) governor Andrew Bailey spoke to the Treasury Select Committee on the subject of inflation. He said there would be a “powerful unwind” of energy band supply shocks but that the Monetary Policy Committee (MPC) was ready to resume raising rates if necessary. Later today the BoE’s chief economist Huw Pill will be speaking.
However, another member of the MPC, Silvana Tenreyo told parliament that inflation was “pretty much guaranteed” to fall and that, at 4%, “In my view, rates are too high right now” and she would consider voting to cut rates next month. Sterling weakened soon after her comments.
In business news, the FTSE hit a new record high yesterday, although there were tough conditions reported for housebuilders and Deliveroo, which cut 800 jobs.
Bard, Google’s rival to ‘large language AI model’ ChatGPT, gave a factually incorrect answer to a question on space telescopes, which led to Google’s shares falling 8%. On a trial release to a team of specialist scientist testers it was perhaps asking for trouble to ask it a science question. “This highlights the importance of a rigorous testing process”, said Google.
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