Strong GBP and Europe's week growth impacts UK's exports

UK's private consumption is stimulated by a combination of low interest rates, very high consumer confidence, increasing house prices, high employment and positive real wage growth for the first time since 2009. 

Going forward, the UK is likely to continue to grow at or slightly above trend growth, mainly driven by domestic demand (especially private consumption).

If growth picks up in Europe this would increase foreign demand for UK goods and services and, according to Bank of England calculations, more than offset the negative impact from the strong GBP.

"Investments are also expected to pick up as the slack in the labour market has diminished significantly, although it is uncertain to what degree investments will be affected by the in/out EU referendum. Exports have been weak due to a combination of the strong GBP and weak growth in Europe", says Danske Bank.