The British pound weakened to $1.22, hovering near low levels last seen in late 2023, as traders assessed key economic data amid growing concerns about a potential stagflationary scenario. GDP figures showed the economy expanded a meagre 0.1% in November, below forecasts of 0.2%, and growth for the three months to November stalled. It means that the economy will stagnate for a second straight quarter unless GDP grows by at least 0.07% in December, according to the ONS. Meanwhile, the annual inflation rate surprisingly fell to 2.5% in December, in line with the BoE's forecast but below market expectations of 2.6%. Traders have so far priced in only a single quarter-point interest rate cut by the Bank of England this year. UK financial markets, particularly the bond market, remain under pressure amid growing concerns about the country’s debt levels and the government’s ability to restore public finances while adhering to its budget plans.
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