The UK’s GDP for June rose by 0.4%, exceeding the 0.1% forecast, according to data from the ONS released on 14 August 2025. Previously, GDP had shown a decrease of 0.1%. <\/p>\n
In the services sector, output increased by 0.3% against an expected 0.2%, following a prior rise of 0.1%. Industrial output saw a growth of 0.7% versus the anticipated 0.2%, with the previous figure revised from -0.9% to -1.3%.<\/p>\n
Manufacturing output matched expectations, growing by 0.5% from a previous decline of 1.0%. Construction output climbed by 0.3%, above the forecast of no change, with a prior figure revised from -0.6% to -0.5%. <\/p>\n
The growth figures reflect stronger performance in various sectors, contributing to the overall GDP increase. Services contributed approximately 0.25%, production 0.08%, and construction 0.02% to the GDP growth. This performance suggests an improvement in the UK’s economic resilience towards the end of Q2, offering the Bank of England more monetary policy flexibility.<\/p>\n
Based on this morning’s surprisingly strong UK growth data, we need to reconsider the Bank of England’s next moves. The economy is showing more resilience than was priced in, which gives policymakers room to keep interest rates higher for longer. This reduces the chance of a rate cut in the near future.<\/p>\n
With the latest July 2025 inflation figures still showing a stubborn 3.1%, this growth report empowers the Bank to continue its fight against rising prices. They no longer have to worry as much about tipping the economy into a recession while doing so. This scenario is reminiscent of what we saw back in 2023, when robust economic data consistently delayed the market’s expectation of a policy pivot.<\/p>\n
For interest rate traders, this means we should expect the SONIA futures curve to reprice sharply in the coming days. The market had been pricing in a 25 basis point cut by November 2025, but that now looks highly unlikely. The prudent move is to unwind bets on falling rates and prepare for short-term yields to remain elevated or even push slightly higher.<\/p>\n
This shift in rate expectations should provide a tailwind for the pound. We anticipate a move to price in more hawkish BOE policy, making sterling more attractive to hold. Traders should consider buying call options on GBP\/USD, anticipating a potential move towards the 1.30 level last seen in early 2025.<\/p>\n
However, we must note the strength is not as overwhelming as the headline suggests, with services doing most of the heavy lifting. The contributions from production and construction were positive but minimal. This indicates the recovery is still narrow and might not sustain this pace.<\/p>\n
For those trading the FTSE 100, the picture is now more complicated. A stronger economy is good for company profits, but the prospect of sustained high interest rates is a direct headwind for stock valuations. We can expect increased volatility, making strategies that benefit from price swings, such as buying straddles, potentially useful in the coming weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" UK GDP rose 0.4% in June, surpassing forecasts; services, industrial, and construction sectors showed gains.<\/p>\n","protected":false},"author":62,"featured_media":17032,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-29039","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t