Tuesday, 29 July 2025
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Pound Slumps As UK Economy Shrinks In April
Thursday, 12 June 2025 15:33 WIB | GBP/USD |GBP/USD

The pound (GBP) fell sharply against other major currencies on Thursday (6/12) as the U.K. Office for National Statistics (ONS) reported that the economy shrank at a faster-than-expected pace in April.

According to the report, U.K. Gross Domestic Product (GDP) shrank by 0.3% month-on-month in April, faster than the 0.1% expected in March. In March, the GDP growth rate was 0.2%. The country's stronger-than-expected economic downturn is expected to force Bank of England (BoE) officials to reassess their "gradual and cautious" monetary expansion guidance, which they delivered in May after cutting interest rates by 25 basis points (bps) to 4.25%.

Meanwhile, factory data also fell at a faster-than-expected pace in April. Industrial Production and Manufacturing Production contracted by 0.6% and 0.9%, respectively, in the month.

On Tuesday, employment data for the three months to April also indicated cracks in the labor market. Business owners in the UK laid off a larger number of employees and hired fewer workers than seen in the quarter to March due to higher employer contributions to the Social Security scheme.

Signs of economic turmoil and weaker labor demand are expected to raise market expectations that the BoE will cut interest rates by more than projected last week.

Looking ahead, the main triggers for the pound will be the UK Consumer Price Index (CPI) data for May and the BoE monetary policy meeting, both due next week. (alg)

Source: FXstreet

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