Key Points for the UK GDP Q4 of 22:
GDP 3-Month Avg (DEC) Forecast 0% Actual 0%
Actual GDP YoY (DEC) -0.1% vs. forecasted 0.6%
Actual GDP Growth Rate YoY Prel (Q4) 0.4% vs. forecasted 0.4%
While the larger picture revealed that GDP was stable in the three months leading up to December 2022, the monthly real gross domestic product (GDP) is predicted to have decreased by 0.5% in December 2022. The GDP for 2022 as a whole was 4.1%.
Following unrevised growth of 0.2% in November 2022, the services sector contracted by 0.8% in December 2022. Activities related to human health, education, the arts, entertainment, and leisure, as well as transport and storage, contributed most to this decline. Consumer-facing service output decreased by 1.2% in December 2022, while production output increased by 0.3% compared to a 0.1% increase in November. The availability of power, gas, steam, and air conditioning was a major factor in this rise.
UK’S PROSPECTS FOR GDP GROWTH IN 2023
In a recent update to its global GDP forecasts for 2023, the International Monetary Fund (IMF) projected that the UK economy will increase by a negative 0.6% for the year. After a generally robust 2022, this would mark a severe drop with the UK economy seeing considerable challenges in 2023. Any effort at a recovery in 2023 would likely be hampered by the continuous worker strikes, government debt, and lingering Brexit concerns.
The IMF noted that it had worries about the future of the UK economy, including energy costs, employment levels, and monetary policy, which is projected to be further tightened to combat inflation. A glimmer of optimism has emerged with the recent dramatic decline in energy costs, but employment has not yet returned to pre-pandemic levels due to the tight labor market, which has not yet taken as many individuals back into employment.
Market response
From a technical standpoint, the GBPUSD price has recovered from a selloff at the conclusion of last week by moving off the 200-day MA. Over the medium term, further declines appear more enticing, but before the next leg down, a break above the 50-day MA and retest of the range or the crucial 1.2500 region cannot be ruled out.