TD Securities expects UK GDP to rise 0.1% month on month in December. The rise is mainly linked to manufacturing, expected at +0.1% m\/m, while the market view is -0.1% m\/m.<\/p>\n
Services are expected to be flat in December, versus a market forecast of 0.1%. The December result would leave Q4 2025 GDP at 0.2% quarter on quarter.<\/p>\n
The 0.2% q\/q outcome matches both consensus and the MPR projection. Services in Q4 2025 are expected at 0.1% q\/q.<\/p>\n
The weak pattern of growth is described as supporting a March rate cut view. The article notes it was produced with assistance from an AI tool and reviewed by an editor.<\/p>\n
Back in late 2025, we were anticipating that tepid fourth-quarter GDP figures would strengthen the case for an early rate cut. The expectation was that even a slight 0.2% quarterly gain, driven by flat services, would signal to the Monetary Policy Committee that economic slack was building. This view set the stage for a potential policy pivot early in the new year.<\/p>\n
The official data released in January confirmed this economic weakness, with the UK economy ultimately recording 0.0% growth in the final quarter of 2025, narrowly avoiding a recession. This outcome was even softer than the modest growth that had been forecast. As a result, market pricing now implies an 85% probability of a 25-basis-point rate cut at the upcoming March meeting.<\/p>\n
Recent inflation figures have further solidified this outlook, with the Consumer Price Index for January falling to 2.8%, continuing its steady decline towards the 2% target. We have also seen the labour market continue to soften, with wage growth cooling and the unemployment rate edging up to 4.4% in the three months to December. This combination of stagnant growth and disinflation gives the MPC a clear runway to begin easing policy.<\/p>\n
For derivative traders, this points towards positioning for lower UK interest rates over the coming weeks. Strategies that benefit from a drop in short-term rates, such as buying put options on SONIA futures or establishing forward rate agreements that lock in a lower future borrowing cost, are now warranted. These trades align with the overwhelming consensus that a rate cut is imminent.<\/p>\n
This policy divergence is also likely to put downward pressure on the Sterling. Traders could use FX options to express a bearish view on GBP, particularly against currencies where the central bank is expected to remain on hold. Buying put options on GBP\/USD, for instance, offers a way to profit from potential currency weakness while strictly limiting the upfront risk.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" TD Securities forecasts UK December GDP up 0.1% m\/m, driven by manufacturing; services flat; supports March rate cut.<\/p>\n","protected":false},"author":62,"featured_media":17031,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41590","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