U.K. economic growth comes in below expectations in Q1 2018

The U.K. economic growth came in below expectations in the first quarter of this year. On a sequential basis, the economy grew 0.1 percent, as compared with consensus expectations of 0.3 percent. But this was mainly due to the Beast from the East snowstorm, whose effects shaved a considerable amount off output at the beginning of March. The bigger issue from the central bank’s perspective is whether this is enough to prompt it to hold off on the long-planned May rate hike.

Mark Carney has broadly trailed the view that the rate hike might take place slightly later than the BoE had planned and the market now sees the possibility of a move next month at less than 25 percent. The central bank has always maintained that it appears through one-off effects when making its decisions, and if the softness of the first quarter GDP is really a temporary effect which is expected to be partially made up in subsequent months, holding off from a rate move introduces unnecessary volatility into the decision-making process, stated Commerzbank in a research report.

It is possible that the BoE contingent might vote to stymie calls from external members for a rate hike next month. But to the degree that Bank Rate is at levels in line with an economy that threatened to go over the cliff in 2009, even the modest growth in GDP shown in the figures released today implies that there is scope for a tightening sooner rather than later, added Commerzbank.

At 13:00 GMT the FxWirePro's Hourly Strength Index of British Pound was highly bearish at -126.738, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 69.4677. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest