The Pound US Dollar (GBP USD) exchange rate fluctuated on Friday following the release of the UK’s latest GDP report.
According to the Office for National Statistics (ONS) the UK’s economic growth slowed to 0.3% in the first quarter, down from 0.7% at the end of 2016 and slower than the 0.4% forecast by economists.
The decline was largely attributed to slumping consumer spending, with households cutting their expenditures as they face the twin pressures of rapidly accelerating inflation and anaemic wage growth.
The figures appear to signal that the economic resilience initially seen after the Brexit vote has come to an end, with analysts speculating that the downtrend may continue over the next few quarters.
Samuel Tombs, the chief UK economist at the consultancy Pantheon Macroeconomics said;
‘The first quarter’s slowdown was led by consumers, whose incomes are under pressure from slowing employment and wage growth as well as rising inflation. One quarter of slow growth is not definitive proof that the economy is on the ropes. But the pressure on consumers’ incomes looks set to build this year as retailers pass on higher import prices.’
Meanwhile the US Dollar was weakened by its own GDP figures as preliminary figures released by the Department of Commerce revealed that the US economy grew at its slowest pace in three years.
US GDP sank to 0.7% in the three months leading to March, down from 2.1% in the previous quarter, with some analysts blaming the mild-weather over the winter as it led to a fall in energy and fuel demand.
However the outlook for the US economy was significantly more upbeat, with Joseph LaVorgna, Deutsche Bank’s chief US economist, predicting that GDP will rebound in the second quarter and show continued growth in Q3 and Q4.
Looking ahead the GBP USD exchange rate may stumble next week if the UK’s latest PMI readings disappoint, with analysts predicting that Manufacturing, Construction and Service sectors will all see activity slow in April.
Meanwhile the US Dollar may also be weakened by on Monday as the US Manufacturing PMI is also expected to fall, with economists forecasting a drop from 57.2 to 56.4 in April.
Current Interbank Exchange Rates
At the time of writing the GBP USD exchange rate was trending around 1.29 and the USD GBP exchange rate was trending around 0.77.