UK GDP arrives at 0% MoM in January vs. 0.2% expected

Lallalit Srijandorn FXStreet

The UK Gross Domestic Product (GDP) arrived at 0% MoM in January, following a 0.1% increase reported in December, the latest data published by the Office for National Statistics (ONS) showed on Friday.

The market forecast was for a 0.2% rise in the same period.

Meanwhile, the Index of services (January) rose 0.2% 3M/3M versus December’s 0%.

Other data from the UK showed that monthly Industrial Production declined by 0.1% MoM in January, while Manufacturing Production climbed by 0.1% during the same period.

Market reaction to the UK data

At the press time, the GBP/USD pair is losing 0.32% on the day to trade at 1.3301.

(This story was corrected on March 13 at 09:14 GMT to say that monthly Industrial Production declined by 0.1% MoM in January, not 0.2%.)

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the weakest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.30%	0.34%	0.03%	0.11%	0.60%	0.72%	0.26%
EUR	-0.30%		0.04%	-0.26%	-0.18%	0.30%	0.41%	-0.04%
GBP	-0.34%	-0.04%		-0.30%	-0.23%	0.26%	0.37%	-0.08%
JPY	-0.03%	0.26%	0.30%		0.09%	0.55%	0.66%	0.22%
CAD	-0.11%	0.18%	0.23%	-0.09%		0.47%	0.57%	0.14%
AUD	-0.60%	-0.30%	-0.26%	-0.55%	-0.47%		0.11%	-0.34%
NZD	-0.72%	-0.41%	-0.37%	-0.66%	-0.57%	-0.11%		-0.45%
CHF	-0.26%	0.04%	0.08%	-0.22%	-0.14%	0.34%	0.45%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Pound Sterling FAQs

What is the Pound Sterling?

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

How do the decisions of the Bank of England impact on the Pound Sterling?

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

How does economic data influence the value of the Pound?

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

How does the Trade Balance impact the Pound?

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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