🇬🇧❗️Cable FX Macro Weekly Note: U.K. Q3 GDP Growth

**As seen in Risk In The Week report 11/03/23, subscribe at cablefxm.co.uk/reports

U.K. GDP is set to slow down in the third quarter after it accelerated by 0.2% Q/q in 2Q, this was in line with the consensus median. Output in the second quarter expanded by 0.6% Y/y, this was faster than the prior and above the consensus median. The biggest contributions were seen in net exports which added 1.8pp to the headline, government expenditure added 0.3pp and household consumption increased for the first time since Q3 2022 with a 0.1pp sum. Gross capital formation took off 1.6pp from the headline, negative contributions have been recorded since the third quarter of 2022. The monthly figure in August expanded by 0.2% on the month, this followed a contraction of 0.6%. A decline in manufacturing was offset by output in the services sector. The desk at UBS updated their forecasts Q3 GDP forecast to -0.1% from flat, and they flagged that growth is likely to be 0.0 during the second half of this year. UBS mentioned that tighter conditions will likely cap investment and that higher mortgage rates impact is yet to feed through. The median forecast sees no growth in the U.K. until 2Q 2024 while economists pencil a 60% chance of a recession over the next 12 months. UBS sees no further rate hikes from the BoE this cycle.