Pound Sterling slumps as UK economy shrinks in April
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The Pound Sterling faces a sharp selling pressure against its major peers as the UK economy declined at a faster-than-projected pace in April. Slower labor demand and economic contraction might encourage BoE officials to consider more interest rate cuts. US President Donald Trump confirms the import of rare earth from China. The Pound Sterling (GBP) falls sharply against its major peers on Thursday as the United Kingdom (UK) Office for National Statistics (ONS) reported that the economy shrank at a faster-than-expected pace in April. According to the report, the UK Gross Domestic Product (GDP) declined by 0.3% month-over-month in April, faster than expectations of 0.1%. In March, the GDP growth rate was 0.2%. This higher-than-projected decline in the country’s economy is expected to force the Bank of England (BoE) officials to reassess their “gradual and careful” monetary expansion guidance, which they delivered in May after slashing interest rates by 25 basis points (bps) to 4.25%. Meanwhile, the factory data has also declined at a faster-than-projected pace in April. On month, the Industrial and Manufacturing Production contracted by 0.6% and 0.9%, respectively. On Tuesday, the employment data for the three months ending in April also indicated cracks in the labor market. UK business owners laid off a significant number of employees and recruited fewer workers than seen in the quarter ending in March on the back of an increase in employers’ contributions to social security schemes. Signs of economic shockwaves and softer labor demand are expected to boost market expectations that the BoE will cut interest rates more times than projected last week. Going forward, the major trigger for the Pound Sterling will be the UK Consumer Price Index (CPI) data for May and the BoE’s monetary policy meeting, both scheduled for next week. Daily digest market movers: Pound Sterling falls…
