UK Growth Beats Forecasts Despite Energy Shock, Rate Hikes Seen Ahead
UK annual GDP rose 2.1% in September, beating the 1.9% consensus in a WSJ survey, while markets now price three more Bank of England rate hikes by July 2027.
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what happened
Britain's economy keeps expanding at a steady clip even as a global energy supply shock weighs on other economies, according to Market Talk. Annual GDP grew 2.1% in September, ahead of the 1.9% forecast in a WSJ poll of economists.
Patrick O'Donnell of Omnis Investments argues that continued steady growth could push the Bank of England to lift rates again, reversing the cuts made in 2024 and 2025. Traders already price in three more BoE hikes by July 2027, after the 25 basis point increase in November, LSEG data show.
why it matters
Stronger data reduce the chance of an early shift to looser policy and tend to support sterling, while gilt yields respond closely to the expected path of rates. The key question for investors is whether growth holds up as the energy shock persists.
market impact
Pound and gilts: strong growth and higher rate expectations support sterling and pressure government bonds
- Pound sterling pressure up — expectations of higher Bank of England rates support the currency
- UK gilts pressure down — rising rate expectations lift yields and push gilt prices lower
tags
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on polymarket
sources
- U.K. Economy Shows Resilience Despite Energy Supply Shock — Market Talk, 12 November 2026 at 09:32 UTC
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