UK GDP came in at 0.6% y/y as expected, monthly 0.2% up on the 0.1% markets were expecting confirming the UK economy has flatlined. The good news- the economy hasn’t fallen into a recession with negative growth, but higher borrowing costs look to be hitting where it hurts and will continue to bite for some time as the Bank of England keeps rates high for an extended period. The British Pound (GBP) rose to 1.9220 (0.5205) at the weekly close and has moderately extended this move Monday to 1.9240 (0.5195) against the Australian Dollar (AUD) as markets await this week’s key UK inflation release. Expectations are for a drop from 6.7% to 4.8% y/y which could rally the Pound.
Current Level: 0.5192
Last week’s range: 0.5198 – 0.5270