UK Economy

Chancellor Jeremy Hunt received a shot in the arm ahead of next month's budget after it was reported UK public finances recorded a record monthly budget surplus in January thanks to a strong tax take and lower-than-expected borrowing.

The British Pound firmed on Friday following the release of stronger-than-expected UK retail sales for January, which will contribute to evidence that the economy will exit recession this quarter.

The British Pound dropped to fresh lows for the week after it was confirmed the UK fell into recession in the second half of 2023.

Bank of England Governor Andrew Bailey has responded to January's inflation data surprise by warning that the numbers do not change the outlook presented at the Bank's last policy meeting.

The Bank of England will cut rates to as low as 4.0% by year-end as recession and deflation threaten the UK economy, according to the Institute of Economic Affairs (IEA).

UK headline CPI inflation might be running at double the Bank of England's 2.0% target, but if we look closer at the data we see a strong disinflation is underway in the UK, opening the door to interest rate cuts.

Pound Sterling dipped against its peers after UK inflation undershot expectations and kept alive hopes that Bank of England interest rate cuts would commence in the summer.

"Our nowcast also suggests that the slowdown in wage growth has faded. We think this combination of a tight labour market and solid wage growth is likely to lead the MPC to take a cautious approach to the timing and pace of rate cuts" - Oxford Economics.

Pound Sterling rose after UK wage data beat expectations and the UK unemployment rate fell to 3.8%, underscoring a tight labour market that can ensure inflation stays elevated.

The UK is likely to earn its recession badge next week after the ONS confirms a second consecutive quarter of decline.

The UK will report another rise in inflation in January, according to one of the country's most accurate forecasters.

A surprisingly strong rise in house prices reported by one of the UK's biggest mortgage lenders will likely ensure the Bank of England keeps interest rates at current levels for some months to come.

The Nationwide House price index shows property prices rose 0.7% month on month in January, and further resilience is seen ahead amidst expectations for lower interest rates.

"New year, new cheer" is the finding of Lloyds Bank, whose Business Barometer survey reports confidence amongst UK businesses has hit a two-year high.

Shop inflation in the UK fell sharply in January, raising hopes that the coming year will finally see the pressures on consumers fade.

UK docks are busy again as ships that rerouted via the Cape of Good Hope in December arrive.

In a boost to the UK economic outlook, consumer optimism for the coming 12 months has strengthened amidst improved personal finances, taking overall confidence to a two-year high in January.

The British Pound was higher against the Euro, Dollar and other major currencies after it was reported the UK economy was firmly in growth territory in January.

The government could have up to £20BN in additional headroom to play with at the time of the March budget, according to an analysis that follows the latest set of UK borrowing figures.

The British Pound fell against the Euro, Dollar and other currencies after UK retail sales for December disappointed.