The BoE upgraded its economic growth forecasts and said
Britain would avoid a recession. Data on Friday showed growth
expanded by 0.1% in the first quarter, but contracted in March,
which analysts said showed the fragility of the recovery.
Not only does the UK have the highest rate of inflation of
any developed economy, it also has the slowest rate of growth
among the Group of Seven richest nations.
However, Berenberg senior economist Kallum Pickering said in
a research note on Friday that Britain's political situation is
"starting to look normal again" after several years of upheaval.
"The UK is one of the few major economies that does not have
either: a) a populist in power; or b) one waiting in the wings
to challenge the next election," Pickering said.
"After being among the most populist-ridden Western
economies in recent years, the UK now compares favourably with
peers – most notably the U.S.," he said.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
UK inflation falling but remains elevated UK growth still lagging behind G7 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Alexander Smith)
By Amanda Cooper
LONDON, May 12 (Reuters) - The pound steadied on Friday
after data showed the UK economy avoided recession in the first
quarter, recovering from its biggest one-day drop since
mid-April the previous day.
Sterling was last up 0.1% against the dollar at
$1.252. It fell nearly 1% on Thursday after the Bank of England
raised interest rates and said it would stay the course.
But with consumer inflation running at 10.1%, investors had
long prepared for a more aggressive stance from the BoE, whose
move gave no new incentive to actively buy the pound, but also
few to sell it.
"The Bank of England's 25-basis point rate hike did not have
any major implications for sterling. The drop in cable yesterday
was almost entirely due to the dollar rally and was in line with
the move in other dollar crosses," ING strategist Francesco
Pesole said.
He said there was a case for more sterling weakness ahead,
but this would most likely materialise in the euro/sterling
rate, which on Friday was down 0.14% at 87.12 pence, as
expectations for where UK and euro zone rates converge.
"For now, however, there aren’t many convincing reasons to
call for sterling underperformance against its main peers in the
near term," he said.
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