Just as we enter into 2023 economists have already started to portray the economic outlook for the UK in a negative light, as many believe that the UK economy will contract more than Russia In 2023. Goldman Sachs predict that the economy will fall around 1.2% in 2023, followed by 0.9% in 2024, which will be considerably worse than the other G10 members. The fall will mainly be forced by a fall in household living standards.
Yesterday PM Rishi Sunak set out the Government's goals for the next two years, the five main targets were.
To halve inflation which currently sits at 10.7%.
To grow the economy.
To reduce national debt which tripled in November as the government tried to protect householders and businesses from the energy crisis impact.
The NHS crisis was also on the list where waiting lists for treatments in October stood at over 7mil & 45% of A & E patients waiting over 4 hours to be seen.
The last main point on the list was to stop migration boats from reaching the shores of the UK, with Sunak stating “if you come to this country illegally, you are detained and swiftly removed”.
US FED policymakers have stated that they are committed to keeping Interest rates high until they have bought inflation down to an ‘acceptable’ level. The recent 0.5% increase ended a streak of four consecutive 0.75% rate hikes while taking the overall fed funds rate to 4.25%-4.5%, its highest level in 15 years.
The US Labour market remains tight which could see the US FED raise interest rates more than expected to tame inflation, however encouraging news which showed that prices paid by manufacturers for inputs fell in December to the lowest level since Feb 2016 if a plunge early in the COVID-19 pandemic is discounted.
GBPUSD has been relatively stable over the past few days with an exception on the first day back after the Christmas & New year break where the pound fell to 1.1930. The pound also fell slightly against the Euro briefly touching 1.1290. Currently, cable remains rangebound between 1.20 & 1.2090 whilst GBPEUR sits between 1.13 & 1.1360.
EURUSD currently resides at 1.0613