The British pound experienced a decline, falling below $1.29 to a nearly two-week low. This movement occurred as market participants responded to a lower-than-anticipated February inflation figure and the Spring Statement. Future economic projections and fiscal adjustments outlined in the statement contributed to the downward pressure on the currency.
- The British pound slipped below $1.29, reaching its lowest level in nearly two weeks.
- UK inflation is now expected to average 3.2% in 2025, a rise from the 2.6% forecast in October.
- 2025 growth forecast was lowered to 1% from 2%.
- Projected public sector net borrowing is expected to decrease from £137.3 billion (4.8% of GDP) this year to £74.0 billion (2.1% of GDP) by 2029-30.
- Borrowing for 2025-26 is projected to be £12.1 billion (0.4% of GDP) higher compared to October estimates.
- The UK’s annual inflation rate eased to 2.8% in February, slightly below the 2.9% forecast but in line with the Bank of England’s projections.
The recent dip in the British pound reflects investor apprehension regarding revised economic forecasts and fiscal policy adjustments. Elevated inflation expectations, combined with lowered growth projections, suggest a potentially challenging economic environment that can negatively impact the currency’s perceived value and attractiveness. The data signals a need for caution among traders, as revised borrowing figures add to the uncertainty surrounding the nation’s fiscal outlook.