Sterling fell against most major currencies yesterday, with the notable exception of the US dollar, which itself dropped across the board following a disappointing final reading for US Gross Domestic Product (GDP).
The US economy grew by an annualised 4.9% in the third quarter of 2023 – a stellar performance compared to some leading economies, but disappointing nonetheless, and another indicator that interest rate cuts are likely to come sooner rather than later in 2024 from the US Federal Reserve.
The same thought has been weighing on sterling in the latter part of this week, following the sharper than expected drop in UK inflation.
If there is one industry that has not brought glory on itself in 2023 it has been economic forecasting, and analysts have been woefully inaccurate this morning too. Overnight and this morning we have had readings for car production in the UK, retail sales and, like the USA yesterday a final result for Q3 GDP.
Retail sales were far better than expected – growth of 1.3% in November – but GDP was revealed to have been slower in Q3 than originally believed – indeed a drop of 0.1%, leaving the UK potentially in recession already, and certainly on the edge.
In the business news, more positively for British chancellor Jeremy Hunt, he signed a financial services deal intended to improve British firms’ access to the Swiss market. It will make it easier for some British financial advisors to work in Switzerland too.
Coming the other way, meanwhile, the government has climbed down over its plan to increase the minimum income needed to bring a foreign partner or spouse to the UK. It will now climb from £18,600 to £29,000, rather than the £38,700 announced three weeks ago.
Good news to finish the final currency note before Christmas; the UK’s largest ever grape harvest. The 943 vineyards in the UK, mainly based around southern England, produced 22 million bottles. An almost perfect year for weather combined with an increase in the amount of land set aside for vines meant that almost twice as many bottles were produced compared to last year.
Cheers, and Happy Christmas!
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