Leading Indicators | Momentum with moderation...
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Here we look at the leading indicators in the world of economics.
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UK GDP grew +0.7% in the first quarter of 2025, its fastest pace in a year
UK GDP grew by +0.7% in Q1 2025, its fastest pace in a year and a sharp pickup from +0.1% in Q4 2024. The rebound was driven by strong performance in the services and construction sectors. By comparison, the Euro Area expanded +0.3%, while the US economy contracted -0.1% over the same period.
UK inflation anticipated to pick up in April
UK inflation data, due tomorrow, is expected to show a rise to 3.3% in April, up from 2.6% last month, driven by higher regulated energy costs. Services inflation, a key gauge of underlying domestic pressures, is projected to remain near 5%. The figures are likely to reinforce a measured approach from the Bank of England, as markets continue to price in two more rate cuts this year.
US credit downgrade sparks volatility in US and UK bond markets
Moody’s downgraded the US sovereign credit rating to Aa1 last week, citing rising debt and the risk of wider deficits if Trump-era tax cuts are extended. The move pushed long-term US yields higher, with the 30-year treasury yield rising above 5% to 5.03%, its highest level since late 2023. UK gilt yields also climbed, with the 30-year reaching 5.50%, reflecting global rate volatility and US fiscal spillover.
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