- Pound (GBP) fell after the IMF report forecasts the worst growth in the G20
- BoE’s Andrew Bailey to speak
- Euro (EUR) rises despite Germany’s IMF downward revision
- German economy to shrink 0.1%
The Pound Euro (GBP/EUR) exchange rate is holding steady after losses yesterday. The pair fell 0.1% in the previous session, settling on Tuesday at €1.1382, after trading in a range between €1.1375 – €1.1414. At 05:45 UTC, GBP/EUR trades +0.01% at €1.1383.
The pound fell in the previous session after the International Monetary Fund warned that the UK economy will be one of the worst performers in 2023 among the biggest 20 economies, which includes sanction-hit Russia.
The IMF forecast that the UK economy will contract this year, although by less than what it had previously expected. The IMF had already forecast that the UK would experience a downturn this year but now expects the economy to shrink by 0.3%, an improvement on the 0.6% previously forecast in January. It is then expected to grow by 1% next year.
The IMF had previously indicated that Briton’s exposure to elevated gas prices and rising interest rates, as well as sluggish trade performance, are reasons for its soft economic forecast.
The dated forecasters believe the probability of a recession in the UK this year are declining. The Office for Budget Responsibility expects the economy to contract by 0.2% this year but avoid a recession. Bank of England governor Andrew Bailey has recently said he’s more optimistic regarding the outlook of the UK economy and was no longer expecting an immediate recession.
Andrew Bailey will be speaking today versus will be watching closely for clues over the future path of interest rates.
The euro pushed higher yesterday as Investors digested the IMF report, which showed that Germany is expected to shrink by 0.1%, a reversal from the small growth that had previously been forecast in January. The data contradicts official estimates in Germany, which now sees the country avoiding a recession this year German economy ministry sees the eurozone’s largest economy growing by 0.2% this year.
