GBP: UK growth outperforms but MPC cautious – TD Securities

TD Securities strategists report that United Kingdom (UK) Gross Domestic Product (GDP) for February significantly beat expectations, with broad-based strength across services, production and construction. The data point to a stronger Q1 than the MPC’s (Monetary Policy Committee) forecast, but the authors emphasize that this is pre-conflict information and therefore unlikely to materially influence the Bank of England’s (BoE) April policy decision, tempering Pound implications.

Broad-based GDP beat versus MPC view

"February showed a clear acceleration in economic momentum in the UK. Headline GDP surprised to the upside at 0.5% m/m (TDS/mkt: 0.1%), reflecting simultaneous strength in services, production and construction."

"Services output increased by 0.5% m/m (TDS/mkt: 0.2%), providing the largest contribution to growth, with 12 out of 14 subsectors showing growth and notable strength across wholesale and retail trade, alongside gains in professional and administrative services."

"Taken together, the February data indicate a genuinely broad‑based pickup in activity, improving both the pace and composition of growth compared with the subdued and uneven pattern seen late in 2025. The 3m/3m measure also increased to 0.5%, setting Q1 up to finish above the MPC forecast of 0.2%."

"However, as this is pre-conflict data, while it may provide some comfort of demand dynamics to the MPC, it is unlikely to steer their decision in April."

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