Earlier this morning, there were some economic figures from the UK, which came in with another disappointment, showing a clear sign of slowing down and increasing the risk of Brexit fears.
Such figures continue to prove that the Bank of England is still far away from changing its easy policy anytime soon. In fact, the risk is rising toward further easing, especially if the slowing down continues.
Today’s Fundamentals
Beginning with the GfK Consumer Confidence Index, it actually posted its 14th month of consecutive declines at -7 last month compared to -6, which is the weakest reading since more than five months.
(Click on image to enlarge)
Â
Â
Secondly, the House Price Index showed a shocking reading, showing a decline of -0.4%, compared to a decline of -0.3% last month, despite the fact that the estimates were to rise by 0.1%.
(Click on image to enlarge)
Â
Â
This is the second monthly decline in a row, one we have not seen since 2012 and the biggest MoM decline since July of 2012, showing concerning signs of a sharp slowing down in the housing markets.
Finally, the GDP also showed a faster slowing down than expected, growing by 0.3% in the first three months of this year, despite the fact that the estimates were pointing to a growth rate of 0.4%.
(Click on image to enlarge)
Â
Â
However, the good thing is that Q4 of last year’s GDP has been revised up to 0.7% instead of 0.6%. Yet, today’s GDP is the weakest growth level since Q1 of 2015. This is despite all of the latest measures conducted by the Bank of England, right after the Brexit referendum results.
Why GBP Is Holding Gains
Despite the recent data today which shows clear signs of slowing down, markets are concentrating on inflation figures, which remains on the rise, bringing consumer income sharply lower.
As long as inflation keeps on rising, GBP pairs might keep on rising. However, such rally is unlikely to be a trend anytime soon, as the Brexit negotiations and the upcoming election is likely to have its negative effect on GBP.
