An underwhelming economic performance didn’t have much of a negative impact on the pound yesterday. In fact, sterling was on course to strengthen against the euro and the US dollar until a late-afternoon downturn meant it ended Thursday broadly level with the day before.
While the headline growth figure of 0.1% in the final three months of 2025 was a disappointment, there was enough hidden in the data to suggest better times may be ahead. Household consumption, for example, came in stronger than expected, while total investment continued its upward trend. The economy grew by 1.3% across the entirety of 2025 – much higher than economists predicted at the start of the year.
When it comes to this year, most major banks expect output to increase. Japanese investment bank Nomura yesterday said it expected a bigger rise in UK Gross Domestic Product (GDP) as households look to spend the savings they’ve stored away.
British politics continued to provide plenty of drama. Downing Street announced that cabinet secretary (the most senior civil service job) Chris Wormald had been ousted. Sir Keir Starmer is still battling the fallout from the Peter Madelson furore ahead of a closely watched by-election in Gorton and Denton.
Sales of existing homes in the United States plunged by 8.4% in January from the three-year high set to end last year. The National Association of Realtors (NAR), which conducts the study, said that affordability was at its best since March 2022, making it a tough to make sense of the recent wild swings.
New analysis from the New York branch of the Federal Reserve found that American customers bore 90% of the costs of Donald Trump’s trade war. That came after several Republicans broke ranks with the White House to vote to block fresh tariffs on Canada, one of the country’s largest trading partners.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract or call your account manager on 020 7898 0541 to get started.
