London bus on bridge

UK GDP: growth stalls

Adam Baldwin
Adam Baldwin 10 September 2021

GBP: GDP figures less than expected

EUR: Lagarde calls it “recalibration” not tapering

USD: Biden on big Covid-19 vaccine push


The UK economy grew by just 0.1% in July as the last Covid restrictions were lifted in England. It was the sixth consecutive month of growth but much lower than in the previous month and below the 0.6% expectations. The ONS said there had been a boost from outdoor events following the easing of restrictions on the 19th July.

Yesterday the pound gained 0.75% against the euro following the ECB’s September policy meeting, saying it would slow down the rate of Bond purchases in the PEPP (Pandemic Emergency Purchase Programme).

BoE Governor Andrew Bailey stated that 4 out 8 members of the MPC believe that the minimum conditions for an interest rate raise have now been met, leading to markets now fully pricing in expectations of the first UK interest rate rise to be in the first half of 2022. Were that to be the case, it would mean that the BoE will move sooner than the Federal Reserve and the ECB which seems highly unlikely in the case of the Fed


With Lagarde stating the QE easing, this would typically be supportive of a currency, but the market has been expecting this decision for some time now, therefore the fall in the euro has allowed sterling to move higher. Until the ECB signals the medium term inflation targets are met at 2%, conditions for a rate raise will not have been achieved. The 2023 inflation forecast was lowered from 1.5% to 1.4% and this suggests that there is little chance of the ECB raising rates in the next 2 years.


US President Joe Biden is pushing for an increase in vaccinations against Covid-19 after a rise in the Delta variant has triggered fresh concerns around the pandemic.

Recent warnings from major investment banks that equity gains in the US are vulnerable to shocks from Covid-19 has dented sentiment, and with producer price inflation soaring, one wonders how long it will be before these price increases are passed onto the US consumer.

Market rates

Today’s Interbank Rates at 11:05 against sterling. Movement vs yesterday.

Euro €1.172 
US dollar $1.387 
Australian dollar $1.876 
South African rand R19.57
Japanese yen ¥152.5 

Have a great day.