The British pound appreciated to $1.329 following stronger-than-anticipated GDP figures, which indicated a robust UK economy and alleviated the urgency for drastic interest rate cuts. The quarterly growth surpassed expectations at 0.7%, with an annual increase of 1.3%. This prompted traders to reassess the extent to which the Bank of England might reduce interest rates this year. Although a rate reduction remains anticipated, the impressive GDP figures suggest that the economy is not frail enough to warrant significant easing at the moment.
In addition to domestic economic indicators, the pound benefitted from a weaker US dollar, amidst growing speculation that the United States might advocate for a depreciated currency in trade discussions. This overarching depreciation of the dollar enhanced the value of several major currencies, including the pound. Despite these positive signals, not all UK economic indicators were optimistic—unemployment rates edged up, and wage growth decelerated, indicating uneven economic progress. Nevertheless, the unexpected strength in GDP figures has bolstered the pound and reduced immediate anxieties regarding economic stagnation.
