Negative surprise in UK GDP to put depreciation pressure on sterling – Commerzbank

In three months to March, the British economy expanded 0.8% QoQ as against a 1.3% growth booked in Q4 and 1.0% expectations. This soft print should put depreciation pressure on sterling, economists at Commerzbank report.

Economic concerns in the United Kingdom

“A positive surprise for the GDP data is unlikely to have a significant effect on sterling. A negative surprise would further fuel economic concerns. And the BoE might feel further confirmed in its view that interest rates should only rise gradually. As a result, a negative surprise might put depreciation pressure on sterling.”

“The conflict between the UK and the EU on the Northern Ireland protocol could intensify. If the row cannot be solved and if this was to lead to a trade conflict the outlook for the British economy would deteriorate further. The market might then have to lower its rate expectations, which would put pressure on sterling.”