Last month the United Kingdom’s economy revealed monumental strength in its recently reported performance measures. This brought its annual growth rate up to 1.2% for the year. However, this figure marks a slight decrease from the prior growth of 1.3%. That still was above the consensus forecast of 1.2%, underscoring the surprising resilience of the British economy under really awful circumstances. The Office for National Statistics (ONS) recently published new data. On the positive side, it confirms that GDP rose by 0.2% in March following an impressive 0.5% advance in February.
Most recently, in the first quarter of this year, the UK’s GDP grew by 0.7%. That growth represents the country’s best quarterly performance in three quarters. That development defied market expectations, which had predicted a much smaller 0.6% rise. After nearly a decade, the economy is finally on a recovery trajectory. An acceleration from just a 0.1% increase in the fourth quarter of 2024 underlines this continued advance.
The new industrial production numbers have really changed the landscape. In March, that was a very strong monthly increase of 2.6%. This growth received a double whammy of positive news as it not only beat high expectations of 1.8% but was the strongest growth since November 2020. This kind of strong industrial activity is a good sign that the local economy will be prosperous and grow in the future.
The combination of strong GDP growth and industrial production figures provides the Bank of England (BoE) with greater flexibility regarding its monetary policy. Our economy is booming beyond anybody’s expectations. That offers the Fed a bit more room to stay on the sidelines from the aggressive easing that could over-stimulate the economy.
At the moment, the EUR/GBP exchange rate is trading around 0.8420 and testing the 200-day Exponential Moving Average (EMA). Traders and analysts watch this widely used technical indicator like a hawk. Even more importantly, it can help signal future changes to the competitive landscape in markets.