United Kingdom: No change to our BOE view following latest slew of UK data – UOB Group

The UK economy continued to rebound cautiously from a recession. GDP grew by 0.6% q/q in 2Q24, after rising by 0.7% q/q in 1Q24. This was in line with consensus expectations, but a tad lower than the Bank of England (BOE)’s forecast for a 0.7% gain, UOB Group economist Lee Sue Ann notes.

Economy continues to recover

“The UK's economy grew by 0.6% between Apr and Jun as it continued its recovery from the recession at the end of last year. The latest figure was in line with forecasts and follows a 0.7% increase in the first three months of this year.”

“Annual CPI inflation rate rose to 2.2% in Jul, its first acceleration since Dec last year, and is expected to remain above its 2% target for the rest of the year. Separately, unemployment fell unexpectedly after companies stepped up hiring.”

“We see a rate hold at the next BOE meeting on 19 Sep, and another rate cut at its 7 Nov meeting, on the premise that data on services inflation and wage growth will soften in the coming months, making the committee more comfortable with proceeding with one more cut this year.”