The British pound experienced a decline, falling below $1.29 to its lowest level in nearly two weeks. This movement was influenced by a weaker-than-expected February inflation reading and the announcements within the Spring Statement. Revised economic forecasts presented by the Finance Minister contributed to the pound’s downward pressure.
- The British pound slipped below $1.29.
- February inflation reading was weaker than expected.
- UK inflation is expected to average 3.2% in 2025, up from the 2.6% projected in October.
- 2025 growth forecast was lowered to 1% from 2%.
- Projected public sector net borrowing is expected to decline 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 expected to be £12.1 billion (0.4% of GDP) higher than October estimates.
- The UK’s annual inflation rate eased to 2.8% in February, slightly below the forecasted 2.9%.
The currency’s depreciation suggests investor sensitivity to revised economic forecasts and inflation data. Upward revisions to inflation projections combined with downward revisions to growth forecasts often lead to concerns about economic stability and the currency’s future value. Increased borrowing further compounds these worries. The pound’s weakening reflects market participants adjusting their positions in response to the evolving economic outlook.