The British pound experienced a decline, falling below $1.29 to a near two-week low. This movement was influenced by a lower-than-anticipated inflation report for February and the release of the Spring Statement, which included revised inflation and growth forecasts alongside public borrowing projections.
- 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 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 to £74.0 billion by 2029-30.
- Borrowing for 2025-26 is expected to be £12.1 billion higher compared to October estimates.
- The UK’s annual inflation rate eased to 2.8% in February.
The confluence of factors is exerting downward pressure on the British pound. The disappointing inflation figures suggest that the Bank of England may be less inclined to raise interest rates aggressively, while the revised economic forecasts paint a less optimistic picture of the UK’s economic prospects. Increased borrowing in the near term further exacerbates the situation, creating uncertainty and diminishing confidence in the pound’s value.