🇬🇧❗️Cable FX Macro Weekly Note: U.K. July GDP Growth

**As seen in Risk In The Week report 09/07/25, get full access now!

June's 0.4% growth helped avert a Q2 flatline, with GDP 4.5% above pre-pandemic (Q4 2019) levels—lagging the Eurozone (6.0%) but ahead of Germany's near-stagnation. The rebound was partly weather-driven and a normalization after front-loaded Q1 activity (e.g., exports up 3.5% in Q1 pre-tariffs). However, U.S. tariffs (effective April 2025) shaved an estimated 0.3% off GDP, per IMF, with motor vehicles and aerospace hit hardest. Chancellor Rachel Reeves hailed the data as evidence of economic momentum under Labour, but analysts warn of headwinds: sticky inflation (3.3-3.4% in 2025), rising unemployment (to 4.6-4.8%), and potential Autumn Budget tax hikes (e.g., employer National Insurance adding £25bn).

Analysts at Wells Fargo warned that private consumption remains of some concern, with retail sales data released this week showed downward revisions to previous months, despite a stronger-than-expected July print. This suggests consumers remain cautious amid potential tax hikes in the Autumn Budget. Wells Fargo continues to expect the BoE to hold rates in September and sees the central bank moving via 25bps rate cuts in November and February, this would leave the Bank Rate at 3.50% by 1Q26.