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Fri, Apr 19, 2024

UK to Release GDP Data Amid Rising Household Spending
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GBPUSD is moving an Ascending channel and the market has reached the higher high area of the channel.

The UK is all set to release their GDP data and economists are expecting the number to come out better than expected. This is going to be a positive news for the GBP currency as it would make it stronger. Here is all you need to know about it.

UK Cost of Living

As a result of the rise in the cost of living, millions of individuals in the United Kingdom are reducing the amount of food they eat and turning off their heating systems. In addition to people going without meals, roughly ten percent put the needs of their family members ahead of their own nutritional requirements. Even before the conflict in Ukraine drove them to record levels, monthly energy expenditures for homes in the United Kingdom started to skyrocket around the end of 2021.

EURGBP is moving an Ascending Channel and the market has reached the higher high area of the channel.

EURGBP is moving an Ascending Channel and the market has reached the higher high area of the channel.

The energy discount program run by the government is scheduled to be scaled back at that time, which means that the real price that an ordinary home pays for its energy would still increase by 20 percent, going from £2,100 a year in April to £3,000. Yet even if the government retains some help, as has been suggested, energy prices would remain enormous at approximately £2,500 for everyone. Still, the most needy, and over 7 million people, will have trouble affording them. In January, consumers were confronted with an increased rate of inflation at supermarkets, which is now at 15.9 percent. Yet, the price of value products on the shelves of supermarkets’ most basic categories is far more than that, at a rate of 21.6%.

England reopen

After more than a decade, during which time earnings have lagged well behind inflation, it has been common practice for millions of people to visit food banks. The inflation rate for groceries as a whole has reached 17.1 percent, which has added an unbearable £811 to the annual costs of households. The Trussell Trust, which manages more than 1,300 food banks across the United Kingdom, is the nation’s largest food bank network. This was an increase of more than fifty percent compared to the number of packages sent during the same time period previous to the epidemic. This was a rise of one third compared to the same time period in 2021.

BOE Bailey Speech

Governor Andrew Bailey of the Bank of England recently gave a speech regarding the importance of the supply chain and the big impact it has on the economy. Bailey reveals, “Monetary policy’s inability to influence supply has at times been taken to suggest that monetary policy has no effects on real economic activity at all.

GBPCAD is moving in Descending channel and the market has reached the lower high area of the channel.

GBPCAD is moving in Descending channel and the market has reached the lower high area of the channel.

In classical economic theory, for example, the monetary policy only affects nominal variables such as wages and prices, not real variables such as the level of production and employment. In this tradition, real business cycle theories have been developed in which supply-side disturbances are the main drivers of real activity. But overwhelming empirical evidence, and many years of practical experience, show that monetary policy affects economic activity and inflation through aggregate demand.”

GBPAUD is moving an Ascending channel and the market has reached the higher low area of the channel. 1

GBPAUD is moving an Ascending channel and the market has reached the higher low area of the channel.

“In the New Keynesian models that have dominated monetary macroeconomics over the past three decades, monetary policy has real effects because market prices are sticky. So when nominal interest rates change, the real interest rates that determine real consumption and investment decisions change with them. And markets may operate with ‘excess supply’ or ‘excess demand’ for as long as it takes wages and prices to adjust to shifts in either demand or supply.”

Bank of England Governor Andrew Bailey stated that rate hikes are possible by the end of 2021 if the inflation rate fires more.

“Rather, it is over longer stretches of time that monetary policy is indeed ‘neutral’ and that we can think of the level of economic activity as being driven entirely by supply. By facilitating low and stable inflation, the monetary policy helps create conditions conducive to economic growth. But other forces will ultimately determine the growth path of the economy. Economic growth – and with it, the prospects for our real national income – will be determined by technological progress, investment, and innovation and by skills and trends in the population.”

The Net Zero Plan

The government is in the process of unveiling a whole new strategy that would minimize greenhouse gas emissions and slash energy prices by investing in nuclear energy and renewable energy sources. Although ministers have stated that they want the United Kingdom to have the cheapest power in Europe by 2035, they have also acknowledged that the approach is not expected to result in lower rates in the coming year.

GBPCHF is moving in Descending channel and the market has reached the lower high area of the channel. 1

GBPCHF is moving in Descending channel and the market has reached the lower high area of the channel.

The Net Zero strategy includes a variety of approaches to reduce emissions, one of which is the announcement of the initial carbon capture sites. As part of the strategy, the government has disclosed the first locations that will be used to store carbon that has been captured. The three locations on Teesside will be responsible for removing carbon dioxide (CO2), a byproduct of the combustion of fossil fuels like gas, and storing it beneath the North Sea.

The fact that there does not appear to be a big increase in financing for the insulation of homes has activists feeling upset. It is one of the most efficient methods to cut down on the heat that is lost needlessly, which in turn drives up utility costs and contributes to pollution. One of the primary goals of this method is to maintain reasonable prices for customers’ monthly energy bills. The government has stated that it is aware that one of the most effective methods to cut costs is to increase the use of renewable energy while simultaneously decoupling the cost of electricity from that of gas.

Energy Information Administration EIA publishes a Natural Gas Storage report every week 1 768x509

Because the United Kingdom is still dependent on natural gas to satisfy its demand at the present, the cost of power is determined by the country’s generators, which charge the highest costs. They stated that they would not be making any statements at this time but that they were looking into various methods. It has recommended that the current green levies on electricity pricing be moved over to gas costs in order to avoid penalizing households for using electricity, which has a lower environmental impact than gas.


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