Anna 
During Friday’s London session, the Pound Sterling (GBP) extended its gains to reach 1.2540 following robust preliminary Q1 Gross Domestic Product (GDP) figures released by the United Kingdom Office for National Statistics (ONS). The data showed that the UK economy expanded at a strong rate of 0.6%, surpassing expectations of 0.4% growth, after experiencing a contraction of 0.3% in the final quarter of 2023.
The significant growth in UK GDP suggests that the technical recession observed in the second half of 2023 was relatively shallow. Annually, the UK Q1 GDP expanded by 0.2%, matching the pace of contraction observed earlier. This annual growth rate was anticipated to be stagnant by investors. Additionally, the monthly GDP growth for March was reported at 0.4%, exceeding the consensus of 0.1% and revising upward from the prior reading of 0.2% (previously reported as 0.1%).
The upbeat GDP growth provides confidence for the Bank of England (BoE) to achieve a ‘soft landing. BoE Governor Andrew Bailey emphasized in the press conference following the monetary policy statement that the central bank is optimistic that inflation will return to target levels in the coming months. A soft landing scenario refers to achieving price stability without triggering a recession, which the BoE aims to accomplish with these positive economic indicators.
