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GBP: UK economic activity surprises to the upside – BBH

GBP/USD recovered above 1.2500 and fell below that point shortly after that, BBH's FX analysts report.

BOE forecasts real GDP at just 0.1% q/q

"Monthly real GDP grew 0.4% in December (consensus: 0.1%) vs. 0.1% in November largely driven by growth in the service sector. On a quarterly basis, preliminary real GDP unexpectedly rose 0.1% q/q (consensus: -0.1%) vs. 0% in Q3 but the details were unimpressive."

"There was no growth in real household expenditure and gross fixed capital formation fell. Inventory restocking was the main growth driver while net trade the biggest drag."

"Beyond Q4, the Bank of England’s (BOE) macroeconomic projections point to near-term stagflation conditions which is a drag for GBP. For Q1 2025, the BOE forecasts real GDP at just 0.1% q/q and CPI inflation at 2.8% y/y."

Eurozone Industrial Production drops 1.1% MoM in December vs. -0.6% expected

Eurozone’s industrial sector activity deteriorate in December, the latest data published by Eurostat showed on Thursday.
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USD/JPY: Likely to consolidate between 153.30 and 154.85 – UOB Group

US Dollar (USD) is likely to consolidate between 153.30 and 154.85. USD could continue to rise; overbought conditions suggest that any advance may not reach 155.80, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
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