Weak UK Macroeconomic Data Negatively Affects the GBP
The UK consumer price index increased by just 0.4% in February and was almost twice as bad as preliminary estimates. Meanwhile, the growth in core inflation, excluding volatile food and energy prices, fell to 0.9%, and this is also significantly below the consensus forecast. Falling prices for clothing, used cars, toys and hobbies led to the largest decline in the rate of inflation in 12 months. This was partially offset by a significant increase in the prices of fuel and housing services in general.
Market participants predictably react negatively to the weak macroeconomic data of the UK. The manufacturing sector is again experiencing serious difficulties, wages have declined over the past three months, and together with insufficient growth in consumer prices, all these factors have caused active sales of the British currency. The pound looks particularly bad against the US dollar, as the US economy, on the contrary, is experiencing a recovery. Market participants are positive about the near-term prospects of the United States, as the situation with the coronavirus in the country is now much better than in Europe. On Wednesday, the exchange rate of the pound/dollar pair reached its lowest value since the beginning of February, and the downward trend will confidently continue in the near future.