UK economic data released this morning showed that GDP grew by 0.7% in Q1—marking a sharp rebound from the previous quarter’s 0.1% increase and exceeding expectations of a 0.6% rise. The figures help alleviate recent concerns around stagnation in the UK economy and provide a more optimistic outlook, despite looming headwinds such as recently introduced tax increases expected to weigh on Q2 performance. Notably, the UK recorded the strongest GDP growth among all G7 nations in the first quarter.
This improved sentiment has translated into modest gains for the pound, with GBP strengthening against both the euro and the US dollar in early trading today.
Attention Turns to Key US Data This Afternoon
The focus now shifts to the US, where several important economic indicators are due later today, including jobless claims, PPI (Producer Price Inflation), and retail sales. The US dollar has underperformed recently despite positive developments in US-China trade talks, and today’s data could influence near-term USD direction.
Starting with labour market data, forecasts point to rising pressures. Continuing jobless claims are expected to tick up to 1.89 million (from 1.879 million), while initial jobless claims are projected to increase to 229,000. These figures would reinforce concerns about softening conditions in the US labour market.
Turning to PPI, expectations are for a month-on-month rebound to 0.2% following a -0.4% decline previously. The reversal could reflect cost adjustments by importers because of the weaker USD.
Lastly, US retail sales are anticipated to stall, with a forecast of 0% compared to last month’s strong 1.5% rise. Such a sharp slowdown would suggest waning consumer confidence and spending appetite, which could further weigh on the dollar if confirmed.
Conclusion
If US data prints in line with expectations—particularly weaker jobs and retail figures—the dollar may come under further pressure, reinforcing the recent upward momentum seen in GBP and EUR.
GBP/EUR 1.1859 GBP/USD 1.3266 GBP/AED 4.8781
GBP/AUD 2.0713 GBP/CHF 1.1126 GBP/CAD 1.8557
GBP/NZD 2.2585 EUR/USD 1.1176 GBP/ZAR 24.0164