UK GDP, Pound Sterling, FTSE 100 Evaluation

Financial Deterioration Confirmed in This fall

The UK economic system has skilled a notable downshift because the begin of 2023 which culminated in a technical recession for the second half of the yr. Worse-than-expected GDP information for the fourth quarter revealed a 0.3% contraction (QoQ) to mark two successive quarters of damaging GDP – the definition of a technical recession.

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With the minor Q3 contraction of 0.1% remaining unchanged, hopes of avoiding a recession all however evaporated. GDP information is topic to vary forward of the following quarter’s outcomes as extra information for This fall trickles in, nonetheless, the sharper contraction in last quarter means it’s extremely unlikely that the recession name can be invalidated.

Regardless of the gloomy information, early estimates of 2023 GDP as some time level to a 0.1% rise in comparison with 2022. This seemingly constructive information is put into perspective when you think about the yearly progress represents the weakest annual change in UK GDP because the monetary disaster in 2009. The histogram under reveals the expansion struggles within the UK regardless of budgetary measures put in place by the Chancellor of the Exchequer within the Autumn assertion. Consideration now shifts to the pre-election Spring Assertion which is because of be held on the sixth of March the place there’s a lot anticipation round potential tax cuts to assist soften the blow.

At 13:00 GMT markets will get perception into how January GDP is monitoring when the Nationwide Institute for Financial and Social Improvement releases its month-to-month tracker.

UK GDP Progress (QoQ)

Supply: Tradingeconomics, ready by Richard Snow

Sterling Eases Additional Whereas the FTSE 100 Opens Larger

The instant market response noticed the pound shifting marginally decrease towards the greenback and the yen. Japan additionally confirmed a recession as This fall GDP missed estimates, taking the market without warning. It has been per week stuffed with UK information however in the end the pound seems to be worse off as a result of if it. A sturdy labour market and cussed inflation have tempered fee reduce expectations for the Financial institution of England this yr however that has failed to supply help for sterling. GBP/USD and GBP/JPY each seem like heading decrease. The Financial institution is unlikely to chop rates of interest in a rush whereas it maintains issues over providers inflation and wage progress.

The FTSE opened strongly this morning, buoyed by the weaker pound. The native index has not loved the identical luck as US indices however appears to realize a two-day advance forward of the weekend.

Multi-Asset Efficiency after the GDP Knowledge (GBP/USD, GBP/JPY, FTSE 100)

Supply: TradingView, ready by Richard Snow

— Written by Richard Snow for DailyFX.com

Contact and comply with Richard on Twitter: @RichardSnowFX