What's going on?

Following soft first quarter growth, more data came out on Thursday suggesting that the British economy is slowing down � and the pound sold off as a result.

What does this mean?

Compared to the month before, manufacturing activity (e.g. producing engines) declined by 0.6% in March � marking the third consecutive month of decline. On top of that, other data showed exports from Britain are falling relative to imports (i.e. Britain is selling relatively less stuff abroad, which is typically bad for its economy).


The slightly darkening picture was punctuated by the Bank of England lowering its forecast for economic growth in 2017, after admitting that its predictions for the first half of the year had been too optimistic (although it did increase its forecast for future years).

Why should I care?

The bigger picture: The Bank of England continues to support the British economy with low interest rates.

The Bank of England announced on Thursday that, as expected, it would not be raising its target interest rate and suggested that it had no plans to do so anytime soon (partly due to the risks that Brexit could pose to the UK economy in coming years). By keeping down interest rates, it remains relatively cheap for people and businesses to borrow, and thus spend, money � which should support the economy.

For markets: The pound dropped a bit on Thursday, but it�s had a strong month.

The value of the pound dropped by about 0.5% versus the US dollar on Thursday, partly because international investors are less willing to invest in a country if its economy seems to be performing worse than expected. However, Thursday�s moderate drop follows significant gains for the pound since the UK�s prime minister called a snap election three weeks ago (click here for background), so Thursday�s move should be kept in context.