According to the official economic data on Monday, the growth in Britain’s economy was noted at the slowest annual pace since 2012. Following the data, analysts are now seeing a greater chance of a rate cut from the Bank of England at the end of January.
Monday’s data showed a 0.6% annual growth in the UK’s economy in November before the general election that occurred on December 12th. The figure, as per the analysts, marks the weakest for the UK’s economy in the past 7 years.
Analysts Had Anticipated The November’s Output To Remain Unchanged
In the previous monthly report for October, the UK’s Office for National Statistics had announced the annual growth at 1%. The data further revealed November’s output to have dropped by 0.3% that marked the sharpest decline in the past 10 months. In a previous estimate, analysts had expected the out to remain unchanged (0.0%) in November
The poor than expected November’s data, the experts added, represented the risen uncertainty driven from Brexit and the UK’s general election in the previous months. According to Accountants PwC chief economist, John Hawksworth:
“It is too early to say for sure if economic momentum will pick up in the new year now the political situation is clearer, but our latest survey of the financial services sector with the CBI does suggest some boost to optimism since the election.”
Probability Of A Rate Cut From The Bank Of England Is Currently At 50%
As per the financial markets survey, there is currently a 50% probability that the Bank of England will decide in favor of a rate cut in its next meeting at the end of January. Following the survey, government bond yields, as well as Sterling, was seen losing traction.
In its November’s prediction, the Bank of England had anticipated that the UK will be able to regain the drop in its economy with the start of the new year as long as the U.S – China trade deal and the UK’s departure from the EU is finalized by then. Only recently, however, BoE’s policymakers Gertjan Vlieghe and Silvana Tenreyro highlighted their inclination towards voting for a rate while the BoE’s Governor, Mark Carney, himself hinted at a greater chance of a rate cut at the end of the month.
Amidst the speculations for an imminent rate cut from the Bank of England, GBP/USD continues to remain under pressure. Following the economic data on Monday, the pair dropped from a daily high of 1.3040 and was last seen trading around 1.2960.