The UK economy recorded its second consecutive month of growth in February as GDP expanded by 0.1%. That figure may seem paltry, but it could prove all important as the UK looks to emerge from its technical recession in a rapid manner.
Not that good news on the GDP front meant good news for sterling. The pound lost almost three cents to the US dollar last week as the perfect storm of US inflation and interest rate expectations rolled in. GBP/USD ended last week at its lowest level since November 2023.
Sterling had a better time of it against the euro, advancing by almost a cent week on week. This came after the European Central Bank decided to hold interest rates for now, but seemed to suggest the first cut could be just around the bend.
In a highly anticipated review of the Bank of England’s forecasting, Nobel laureate Ben Bernanke said it must revamp its main economic model to avoid future failures. The review came in response to the Bank’s failure to warn against runaway inflation over the past several years.
Last week provided the perfect evidence of just how quickly currency markets can move. It’s something we highlight often in our currency notes as we’ve seen our fair share of transactions scuppered by turbulent markets.
One thing you can do to protect yourself is to be proactive in managing your currency risk. Our Quarterly Forecast, the next edition of which is due to arrive tomorrow, can help you to do that. In the report, we look at everything that matters to your budget, from central banks and interest rates to geopolitical risks, on land and at sea. We highly recommend you download your copy, free of charge.
Here’s what to look out for this week…
Us retail sales are Monday’s main event, before UK unemployment arrives on Tuesday.
The UK remains in the spotlight on Wednesday with March’s inflation release, before Thursday brings US jobs data and a couple of speeches from Fed governors.
Friday ends on a slighter quieter note, with UK retail sales the highlight.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 7898 0541 to get started.
