Sterling Update: UK Enters Recession

Sterling Update: UK Enters Recession

Here’s the latest currency news from our partner Moneycorp, to help you find out what your money is worth.


This week, we saw a string of significant data releases come out of the UK. First, we heard from the Bank of England’s Governor Bailey on Monday, who gave an on monetary policy plans for 2024. Ahead of the growth data released later in the week, Bailey suggested it was not too important if the UK entered a technical recession, saying, “I would not put too much weight on that”. He implied that other metrics were showing more positive signs about the direction of the economy.

This was shortly followed by the UK’s latest unemployment data, released Tuesday morning. Forecasts anticipated a slight drop from 4.2% to 4% over the last three months, but unemployment was lower than expected at 3.8%. This sees the UK return to within the range of 3.5-4%, which has generally been the unemployment trend for both 2022 and 2023.

January’s Consumer Price Index (CPI) inflation readings were published on Wednesday, with markets expecting another slight increase in headline inflation from 4% to 4.1% ahead of the announcement. However, the figure came in lower than expected at 4%, which was flat from the previous month. Core CPI inflation also fell below market expectations of 5.2%, landing at 5.1%, the same as December’s reading, and inflation fell by 0.6% on a monthly basis.

Higher energy prices were the primary contributor to rising inflation, but this was offset by downward trends in furniture, household goods, food, and non-alcoholic beverages.

Thursday’s growth data indicated the UK fell into recession in the last quarter of 2023 after the economy contracted by 0.3% in Q4. This was a more significant contraction than expected, with markets anticipating negative growth of only -0.1%.

This means the UK has entered a technical recession, which economists commonly define as two consecutive quarterly contractions.

The pound only dropped slightly against the euro and the dollar following the news, which could mean there was an expectation in the market that the UK was heading for a mild recession. Investors increased bets on the Bank of England cutting interest rates, with the expectation now that there will be three or four quarter-point rate cuts in 2024, with a 75% chance the first one will come in June.

Today, the UK ended the week on a positive note, with UK Retail Sales numbers posting a healthy recovery, jumping to 3.4%, significantly higher than the 1.5% increase expected and following the -3.2% seen last month. Despite the latest growth data, this could point to a return to growth in 2024.


Much less data was released in Europe this week, which meant most of the volatility for the currency pairs involving the euro was mainly driven by the value change of the other currency.

The most significant release of the week was the latest growth data for the EU on Wednesday. GDP in Europe remained unchanged at 0.1% for the year-on-year Q4 reading and landed at 0.0% for the quarterly reading.

Disclaimer: This commentary does not constitute financial advice.

Why Moneycorp?

With a Platinum Trusted Service Award 2020 from independent review site Feefo and 40 years of experience in the industry, FrenchEntrée has been recommending Moneycorp for more than 15 years. During this time they have helped thousands of client planning the best way to pay for their property as well as supporting them afterwards with any further payment from paying bills, mortgages to repatriating UK pension payments for those who have retired to France.

Image preview

Furthermore, we have worked with the same person at Moneycorp for more than a decade! You might be familiar with her as she often writes for our French Property News magazine. She has 13 years’ experience in foreign exchange, and is a qualified European lawyer with experience in European transactions. Mar will be happy to answer any questions or enquiries to support you through these difficult times

Opening an account is really easy and free of cost. You can register online or over the phone in a couple of minutes and for FrenchEntrée readers there are no transfer fees in any payment.

Share to:  Facebook  Twitter   LinkedIn   Email

More in currency

Previous Article News Digest: Notaires de France Property Report & France’s Government Reshuffle
Next Article French Property Location Guide: Somme

Related Articles

Leave a reply

Your email address will not be published. Required fields are marked *