UK ONS reported that UK GDP grew by only 0.1 percent in October, while it had accelerated 0.6 percent in September.
Pound sterling continues to lie below the 1.3200s range against the US dollar in the early stages of trading in the European session today (10/December). The release of UK Gross Domestic Product (GDP) data shows a very disappointing growth in the period October 2021, so the prospect of a "BoE rate hike" next week is getting thinner.
The UK Office for National Statistics (ONS) reported that UK GDP grew by only 0.1 percent (Month-over-Month) in October 2021, significantly lower than both consensus expectations (0.4 percent) and the previous month's growth (0.6 percent). The ONS added that the UK economy was still 0.5 per cent below pre-pandemic levels.
The GDP report this time further worsens the outlook for the UK economy. Moreover, PM Boris Johnson yesterday announced the tightening of social distancing rules to tackle the new wave of COVID-19.
Maike Curry, investment director at Fidelity International, said, "With the government moving to implement Plan B over concerns over the Omicron variant, there is a feeling of déjà vu. Workers are back at their kitchen tables, and the big festive season that retailers and the hospitality sector are looking forward to may be. not as bright as expected."
"Towards 2022, growth forecasts have been lowered for next year with GDP forecast to reach just 4.2%. High inflation rates and Omicron concerns are likely to cap consumer spending, while companies struggle with ongoing headwinds. With uncertainty looming, the road ahead is becoming increasingly difficult to drive. The BoE will be well aware that it is harder to dig the economy out of recession than it is to cool rising inflation, so a rate hike next week is increasingly unlikely."
Similar pessimism surfaced in the opinion of a number of other analysts. Inevitably, the pound sterling exchange rate depressed against most major currencies. At the time of writing, sterling was still depreciating at around 150.00 against the Japanese yen. EUR/GBP also rose around 0.2 percent to the range of 0.8550s, after being corrected quite far in yesterday's trading.
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