- The Pound Sterling drops across the board as UK GDP and Industrial Production figures disappoint.
- UK exports to the US saw their largest monthly decline in record, despite the UK-US trade deal.
- Weak UK data has boosted expectations of further BoE easing.
The Pound accelerates its reversal against the Japanese Yen and is nearing the bottom of the last week’s trading range, at 194.70 hammered by downbeat UK monthly GDP and manufacturing production figures.
Higher taxes and Trump’s tariff turmoil hit the UK economy in April, and the GDP shrank at a 0.3% pace, its worst monthly performance since October 2023. These figures exceed the 0.1% contraction forecasted by the experts and reverse the 0.2% and 0.5% increases in March and February.
Weak data boosts BoE cuts hopes
Apart from that, Manufacturing Production contracted 0.9%, beyond the 0.8% expected, and Industrial Production fell 0.6%, also outpacing the market forecasts of a 0.5% decline. April’s trade deficit widened to 23.20 billion GBP from less than 20 billion GBP in March
The US-UK trade deal has failed to avoid a record monthly fall in exports to the United States. UK businesses have been forced to lay off employees and postpone investment decisions, hit by higher tariffs in the US.
These figures point to a weak GDP growth in the second quarter, which, coupled with the higher unemployment figures seen on Tuesday, have boosted hopes of further BoE easing. Futures markets are pricing about two more rate cuts before the end of the year.
