By Nick Harrison
The UK month-on-month GDP figure was released early yesterday morning and came in above a flatline expectation at 0.2%. The preliminary GDP figure was also released and came in at 0.7% versus the forecasted 0.6%.
The GDP figure is the measure of economic activity and the primary gauge of a country’s economic health. It is measured by the change in total value of goods and services produced by that country.
GDP is now estimated to have grown by 0.7% in the 3 months to March this year and has therefore taken the pressure off a previously talked-about recession.
The Services and Production sectors were the main drivers behind these encouraging figures as Services increased by 0.7% and Production by 1.1%.
The Chancellor of the Exchequer, Rachel Reeves, was naturally encouraged by this news and said the UK economy was “beginning to turn a corner”. She has been under much scrutiny recently due to her policy of increasing employers’ National Insurance contributions and was criticised by many business leaders who said this could hit UK economic growth. The Pound of course, has also been under pressure since US President Trump’s tariff announcements, but news like this will lighten the mood, albeit slightly, amidst a recently negative outlook for the UK.
Elsewhere, the US posted a raft of data yesterday afternoon. PPI, Retail Sales and Unemployment data were released and showed a bit of a mixed bag of results.
Firstly, PPI came out showing a negative figure compared to the forecasted figure. PPI stands for the Producers Price Index and is change in price of finished goods and services sold by producers excluding food and energy. Both Core and monthly figures showed a drop of minus 0.4% and minus 0.5% respectfully against forecasted positive figures. Next up were the month-on-month and core retail sales figures. These both came in at 0.1% which showed a very sluggish growth in this key market that strongly influences inflation. And finally came unemployment claims that posted exactly the same figure as expected at an additional 229,000.
Plenty to digest then for the Federal Reserve Bank as they decipher this data and factor it into their monetary policy decision.
So how has this influenced the Foreign Exchange market this week ? Well, the Pound is in a much stronger position against the Euro and we are now seeing the best price range since the beginning of April. It has recovered by nearly 4 cents against the Euro since Trump’s tariff announcements, so if you are buying a place in Europe, then do consider reaching out to your consultant at A Place in the Sun Currency who can provide a considered outlook to what the market is doing. Likewise with any US Dollar buyers: we are now in the highest price range seen since September 2024, so now could be the time to capitalise on this level and get a much higher return in US Dollars to your Pound.
The week finishes with Consumer Sentiment and Inflation Expectations in the US released this afternoon at 3pm. Next week will highlight on Wednesday as the UK Inflation Figure (CPI) is released at 7am.
Economic Data Releases
TODAY
US Consumer Sentiment & Inflation Expectations (3pm)
NEXT WEDNESDAY
UK CPI (Inflation) (7am)
NEXT THURSDAY
French Manufacturing & Services PMI (8.15am)
German Manufacturing & Services PMI (8.30am)
UK Manufacturing & Services (9.30am)
US Unemployment Claims (1.30pm)
US Manufacturing & Services PMI (2.45pm)
NEXT FRIDAY
UK Retail Sales (7am)