GBP: UK GDP expectations and March cut view – TD Securities

TD Securities expects UK GDP to rise 0.1% m/m in December, driven mainly by manufacturing, with services flat. This would leave Q4 2025 GDP at 0.2% q/q, matching consensus and MPR projections, and only modest services growth. Such tepid performance is seen reinforcing MPC doves and supporting TD’s view of a March rate cut.

Soft growth seen backing early easing

"We expect GDP to eke out a slight gain in December (TDS/Mkt: +0.1% m/m), largely through contributions from the manufacturing sector (TDS: +0.1% m/m, Mkt: -0.1%), as the index of services remains flat (mkt: 0.1%)."

"This would round off 25Q4 GDP at 0.2% q/q, in line with both the consensus and MPR projections, while the services sector likely only shows 0.1% q/q."

"Tepid growth would further feed into the MPC doves' narrative that slack is building in the economy, and reinforce our view of a March cut."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)