No not the UK economy as it turns out, but the 2017 new Rhone wine vintage (according to the French!) Yesterday’s UK Q4 GDP release further confirmed what we have been saying with GDP Growth slowing to 0.2%. Not great- and the market is keeping a close watch on the inflation figure with medium term inflation projected to be above the 2% target. This is the weakest UK growth picture since 2009, but before we all fall on our swords, this is in the context of the EU economy looking weak with Germany’s factory orders falling by 1.6% in December and order books 7% lower than a year previously.
Needless to say the doomsters are out in force blaming Brexit but hang on a second: yes investment in the UK has definitely been reduced with a 3.7% fall in Q4 compared to a year earlier due to uncertainty, but as signposted above the UK is not alone in the global growth picture. Last but not least, household spending is holding up well with a gain of 1.9% over 12 months earlier.
So what has the currency market made of all this? Initially GBP fell by a third of a cent and then it recovered against both the USD and the EUR and then it slipped back more than half a cent overnight. The USD has strengthened against all currencies as markets are now more optimistic about NOT seeing a further US Government shutdown; also the US China trade talks are looking more positive. Two UK focuses for today: firstly Mark Carney will be talking about his views about the global economy which is not keenly anticipated bearing in mind it is less than a week since he last gave his prognosis. Secondly the Brexit status update promised by PM Theresa May for tomorrow has been brought forward to today- one of the only times that anything Brexit related has been brought forward! That is keenly anticipated and while it is expected that Theresa May will call for more time and encourage Parliament to have patience, it is the fine detail and the ensuing questions that will determine whether the market and the MPs buy it.
It may be time to reach for a glass of that Rhone later on in the day!
Discussion and Analysis by Humphrey Percy, Chairman and Founder
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Missing haven
Charles Porter
Tue 7 Apr 2026
Missing haven At the start of the year, the Franc had performed well as a safehaven. As a result of political and economic developments in Japan, the Yen was not abiding by its usual safehaven form. Therefore, defensive plays within FX only had two credible places to go: the US Dollar or the Swiss Franc. […]
Daily Brief – Battle of the banks
Charles Porter
Thu 2 Apr 2026
Battle of the banks Market volatility continues amidst unclear messaging from both sides of the conflict in Iran. The President’s position has continued to flit between seemingly concrete positions of absolutely tangible progress and bombing the nation back ‘to the Stone Ages’. Since the start of the war, smarter money has acknowledged that predicting the […]
Daily Brief – Questioning Truth
Charles Porter
Tue 24 Mar 2026
Questioning Truth Adopting the same handle as his now rather redundant X account, @realDonaldTrump shocked markets yesterday using his own social media platform, Truth Social. During Trump 1.0, the legitimacy of a President using an unofficial X, then Twitter, account was questioned. Now under Trump 2.0, it’s seldom questioned when he is the majority shareholder […]
