The British economy grew at its fastest pace in 80 years in 2021, according to data released Friday. GDP in the British Isles grew by 7.5 percent, thanks to a lower base from 2020, when the British economy contracted by 9.4 percent.
In the final three months of 2021, the British economy expanded at a quarterly rate of 1 percent, the same as in the previous period and slightly below forecasts of 1.1 percent, Health and social work activity made the largest contribution to GDP growth, driven by an increase in GP visits early in the quarter, as well as a large increase in coronavirus testing and tracking activities and an expansion of the vaccination program. Household consumption rose 1.2 percent, government spending rose 1.9 percent, gross fixed capital formation rose 2.2 percent, and exports jumped 4.9 percent.
Since the U.K. data seems to be as interesting as the U.S. data, the British pound may be an equally interesting currency in addition to the U.S. dollar. On top of that, there are quite a significant number of data releases from the British economy scheduled for next week. Investors may try to read from them how the Bank of England, which was recently a hair's breadth away from raising interest rates by 50 basis points, may proceed.
Currently, the Bank of England may be on track to raise interest rates at both its March and May meetings. From the upcoming data, one can keep an eye on the labor market, where the unemployment rate now seems to be close to the pre-viral levels. Apart from the labor market, inflation may be key to the Bank of England and GBP decision. It seems that it may climb to the region of 7% in April due to the expected increase in electricity prices.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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