Sterling leapt to its best level of 2025 against the US dollar yesterday, after greater than expected growth in the UK economy.
Gross Domestic Product (GDP) for December showed 0.4% growth, taking the quarterly number into the positive, albeit only just. That takes growth in the UK economy to 1.4% in 2024 – half that of the USA but probably more than the eurozone – we’ll get their number later this morning.
The GDP figure means that the government can claim to have avoided stagflation (zero growth alongside inflation) and sterling also recovered marginally against the euro, taking its gains over the past month to 1.3%.
One price that will be going up is water, at least for some, with Thames Water asking for price rises in excess of 35% over the next five years.
And one going down; hopes for a peace deal in the Ukraine War hit the oil price. The markets taking an entirely business-like attitude to talks with Russia, with hopes of freer markets and end to sanctions
This “risk on” mood hit the dollar, with across-the-board drops against major currencies.
This morning, we have had a reading for wholesale prices in Germany. They shot up by 0.9% in January, with worries that they will feed into retail prices. Spain’s inflation rate level was confirmed at 2.9%, slightly below expectations.
There have been new warnings of tariffs from the Trump administration overnight, with a plan to develop custom tariffs for each country within 180 days.
France’s President Macron has risen to the challenge, saying that Europe must “muscle up” both economically and militarily, to protect Ukraine.
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