16 January 2023 - Inflation may have peaked

The data for GDP that was released late last week confounded markets that had seen very little cause for redemption for the UK economy following a year that was characterized by negativity at just about every turn. Political upheaval, industrial action, inflation and Brexit each conspired to provide an expectation of weakness and recession for the economy. However, there was one bright spark in the final quarter of the year, provided by the FIFA Men’s World Cup, which took place in Qatar. While the performance of the England team was fairly predictable, the tournament gave a healthy boost to the economy and allowed it to show a surprising level of growth and activity at a time of year that often disappoints. The UK economy grew by 0.1% in October, boosted by significant activity in the hospitality sector and video game sales. It had been expected to contract by 0.2%. While the country is far from out of the woods yet, the data reduces the chance that a recession has already arrived in the final quarter of the year. The surprising level of growth seen in December means that the economy will need to have shrunk by 0.5% to record a technical recession, in which the economy contracts for two consecutive quarters. Beyond Currency Market Commentary: Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.