British Pound: Strong Q2 may give way to flat growth - TD Securities

TD Securities strategists expect United Kingdom (UK) June Gross Domestic Product (GDP) data to show a reversal of May’s strength in professional services, offsetting solid retail sales and leaving the Index of Services flat, with modest industrial weakness keeping monthly GDP at 0.0% m/m. Despite muted June, they see Q2 GDP at a firm 0.4% q/q but warn this apparent strength may be artificial, implying flat GDP in the second half of 2026.

Q2 growth firm but questioned

"We expect June to reverse some of May’s outsized strength in professional services, offsetting solid retail sales and leaving Index of Services flat (mkt: 0.0%; prior: 0.3%)."

"Together with modest weakness in industrial production, this should keep GDP at 0.0% m/m (mkt: -0.1%; prior: 0.1%)."

"Despite the muted June, however, Q2 growth is still on track for a firm 0.4% q/q (mkt: 0.4%, BoE: 0.3%), ending the first half of the year on a note of strength."

"We do believe this strength could be artificial though, suggesting a potential flat-lining of GDP growth in the second half of 2026."

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