Disturbing data from the British economy

The British pound fell to its lowest level since November 2020 when the latest data showed that the British economy had slowed sharply.

In February this year. the UK economy grew at a rate of 0,1 percent. on a monthly basis. This means a significant decrease compared to the growth rate in January - 0,8 percent. and a reading lower than market forecasts assuming an increase of 0,3%. - results from published data.

Inflation in Great Britain may break 8 percent.

In the field of monetary policy Bank of England made the third consecutive interest rate hike in March, bringing the cost of credit back to pre-pandemic levels. One policymaker, however, voted in favor of keeping rates unchanged, while back in January all were in favor of a rate hike, saying that further policy tightening might be appropriate in the coming months.

Bank of England council members warned that inflation, currently at its highest in 30 years, could rise to around 8%. in the second quarter of 2022, and in the following quarters it may turn out to be even higher.

Will the ECB also respond with an interest rate hike?  

Federal Reserve it is likely to raise the federal funds rate by 50 basis points this month, as inflation in March could reach 8,5%, the highest level since December 1981. The response to rising inflation may also begin European Central Bank. The yield on German 10-year bonds seems to rise to 0,8%, the highest level since February 2018, as markets price in an ECB interest rate hike of 70 basis points by the end of this year.

Last week, the estimates assumed a hike to a lesser extent - by 65 basis points. The minutes of the March ECB meeting turned out to be more hawkish than expected. Officials signaled plans to end the asset purchase program in Q7,5, with many in favor of an immediate normalization of policies due to high inflation. Initial estimates indicated that in March it would reach XNUMX percent. We will know the ECB's decision next Thursday.

Apart from the ECB's decision, the euro exchange rate may also be influenced by the result of the presidential election in France. In the first round Emmanuel Macron Although he overtook the leader of the far right, Marine Le Pen, the second round will be needed to be settled, which will take place on April 24.