- The Pound Sterling is undergoing a retracement against the US Dollar, approaching the 1.3310 level, as the British currency exhibits broad-based underperformance.
- The United States economy experienced a contraction of 0.3% during the first quarter of the year, spanning January to March.
- Bank of England policymaker Greene anticipates that the tariff policies implemented by the Trump administration will exert a net disinflationary effect on the UK economy.
The Pound Sterling (GBP) is extending its corrective move, trading near 1.3310 against the US Dollar (USD) during Wednesday’s North American trading session. This pullback follows a recent three-year high of 1.3445 achieved on Tuesday. The GBP/USD pair is currently trading near its intraday low, influenced by a strengthening US Dollar (USD) that has gained momentum following the release of key economic data from the United States (US).
The newly released US economic data indicates a contraction in the nation’s economy during the first quarter of the year. Furthermore, the data reveals that job growth remained sluggish throughout April, raising concerns about the pace of economic expansion.
The US Bureau of Economic Analysis (BEA) has reported a decline of 0.3% in the Gross Domestic Product (GDP) on an annualized basis. This figure contrasts with economists’ expectations of a moderate growth rate of 0.4%. Notably, the US economy demonstrated robust growth of 2.4% in the final quarter of 2024. This marks the first instance of economic contraction in the US since the first quarter of 2022, signaling a potential shift in the economic landscape. The contraction has fueled speculation about the Federal Reserve’s future monetary policy decisions, with some analysts suggesting a possible delay in interest rate hikes.
The US ADP National Employment Report indicated that the private sector added 62,000 new jobs in April. This figure falls significantly short of economists’ projections, which anticipated the creation of 155,000 jobs, and is considerably lower than the 155,000 jobs added in March. The weaker-than-expected ADP data has further contributed to concerns about the strength of the US labor market and its potential impact on overall economic growth. Investors are now closely watching the upcoming official non-farm payrolls data for further insights into the labor market’s performance.
