The British pound experienced a decline, falling below $1.29 to a near two-week low. This movement appears to be driven by a combination of factors, including lower-than-anticipated inflation figures for February and reactions to the recent Spring Statement. Revised economic forecasts projecting higher inflation and reduced growth likely contributed to the pound’s weakness.
- The British pound slipped below $1.29.
- February inflation reading was weaker than expected at 2.8%.
- 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 to £74.0 billion by 2029-30.
- Borrowing for 2025-26 is expected to be £12.1 billion higher than October estimates.
The observed weakening of the British pound suggests that market participants are reacting to a confluence of economic signals. Higher projected inflation coupled with lower anticipated growth creates a challenging environment. While government efforts to manage public sector borrowing are noted, the upward revision of near-term borrowing estimates may be weighing on investor sentiment. Overall, the currency’s performance reflects concerns about the UK’s economic outlook.