Core Viewpoint - The global financial market is betting that the Bank of England will maintain a 4% base interest rate for the remainder of the year, driven by rising inflation and resilient economic growth [1][2] Group 1: Economic Indicators - Recent data shows that the UK's GDP grew by 0.3% in Q2, surpassing economists' expectations of 0.1% and the Bank of England's own forecasts [2] - The labor market is also performing strongly, with multiple indicators exceeding analysts' prior expectations, reinforcing the resilience of the economic fundamentals [2] Group 2: Market Reactions - Following the shift in policy expectations, the British pound has appreciated by 2.5% against the US dollar this month, making it the best-performing currency among the G10 [2] - Analysts attribute the pound's strength to the Bank of England's quicker end to the rate-cutting cycle compared to other major central banks, creating a favorable interest rate differential [2] Group 3: Future Outlook - Market participants are closely monitoring upcoming key data, including the July inflation report and preliminary Q3 GDP figures, which will inform the Bank of England's policy direction [2] - Most institutions expect the Bank of England to likely keep interest rates unchanged in the September meeting while assessing whether inflation will exert sustained upward pressure [2]

Core Viewpoint - The UK economy showed signs of slowing growth in Q2, with GDP growth at 1.2% year-on-year, slightly down from 1.3% in Q1, but still above market expectations of 1% [1] Economic Performance - In June, UK GDP grew by 1.4% year-on-year, the highest since February, surpassing expectations of 1.1% and revised from a previous value of 0.7% to 0.9% [1] - The quarterly GDP growth for Q2 was 0.3%, indicating a modest recovery [1] - The service sector was a key driver, with output increasing by 0.3%, while industrial production rose by 0.7% and construction output grew by 0.3% [1] Monetary Policy Outlook - Economists from Santander and Berenberg suggest that the Bank of England may maintain the base interest rate at 4.0% for the remainder of 2025, given the better-than-expected economic data and anticipated inflation rise [1][2] - However, there are differing views in the market regarding the sustainability of UK economic growth, with some expecting a rate cut in December [2] Concerns on Growth Sustainability - Private consumption was weaker than expected, and business investment saw a significant decline, indicating insufficient internal growth momentum [2] - The strong performance in Q2 was primarily supported by government spending and net exports, which may not be sustainable in the long term [2] - Key components such as household consumption and business investment were notably weaker compared to Q1, raising concerns about future growth [2]

Core Viewpoint - The British pound is likely to face further downward pressure due to weak GDP data released on Friday, indicating economic contraction in May [1] Economic Data - UK GDP unexpectedly shrank by 0.1% in May, highlighting downside risks to economic growth [1] - The weak economic performance has strengthened market expectations for a potential interest rate cut by the Bank of England in August, unless June inflation data shows unexpected improvement [1] Inflation and Market Sentiment - Stable inflation may provide some short-term support for the pound; however, medium-term outlook remains bleak due to fiscal tightening and weak labor market data [1] - Monthly GDP contraction further suggests that the pound will continue to face sustained pressure [1]

Core Insights - The UK economy experienced a quarter-on-quarter growth of 0.7% in the first quarter [1] Economic Performance - The growth rate of 0.7% indicates a positive trend in the UK economy, suggesting resilience amidst potential challenges [1]

Group 1 - The UK economy grew by 0.7% in the first quarter, matching expectations for the same growth rate [1]

Group 1: Macroeconomic Insights - HSBC reported that the UK economy grew by 0.7% in Q1, exceeding expectations, but may face a downturn due to global uncertainties [3] - The growth was supported by strong investment driven by one-off expenditures, but potential declines in trade are anticipated in Q2 [3] - Rising utility costs and increases in wage taxes and minimum wage are expected to impact corporate labor costs [3] Group 2: Currency and Market Reactions - The GBP's reaction to improved UK economic growth data has been muted, indicating cautious interpretation by investors [3] - Despite a 0.7% growth in Q1 following a 0.1% increase in the previous quarter, the growth was driven by unstable corporate investment factors [3] - The Bank of England is likely to interpret the economic slowdown risks as a reason to proceed with gradual interest rate cuts [3] Group 3: Gold Futures Analysis - Gold futures prices have ended a six-day decline, currently reported at 752.74 CNY per gram, with a 1.01% increase [4] - The highest price reached today was 759.20 CNY per gram, while the lowest was 746.44 CNY per gram [4] - Resistance levels for gold are identified between 819-829 CNY, with support levels at 712-722 CNY [4]

Core Viewpoint - The British pound reacted cautiously to improved UK GDP data, indicating a careful interpretation of the figures by investors [1] Economic Data Summary - The UK economy grew by 0.7% in the first quarter, following a 0.1% growth in the previous quarter, driven by unstable factors in business investment [1] - Investors may be overly cautious in interpreting the first quarter data, suggesting a continued cautious stance [1] Central Bank Outlook - The Bank of England perceives risks of economic slowdown due to the US's announced tariff measures in April, which may lead to further gradual interest rate cuts [1]

Core Insights - The UK economy achieved its strongest quarterly growth in a year, with a GDP increase of 0.7% in Q1, up from 0.1% at the end of 2024 [1] - March alone saw a 0.2% economic growth, contrary to economists' predictions of stagnation, indicating resilience among businesses and consumers prior to tax hikes and global tariffs [1] - Strong growth in the services and construction sectors offset a sharp decline in manufacturing [1] Economic Performance - The UK GDP growth of 0.7% in Q1 marks a significant acceleration compared to the previous quarter's growth rate [1] - The economic performance in March, with a growth of 0.2%, exceeded expectations, showcasing a positive trend before the implementation of tax increases and tariffs [1] Sector Analysis - The services and construction industries demonstrated robust growth, which played a crucial role in supporting the overall economic performance [1] - In contrast, the manufacturing sector experienced a notable downturn, highlighting sector-specific vulnerabilities [1] Future Outlook - KPMG's chief economist, Yael Selfin, cautioned that the current growth surge is likely to be short-lived due to adverse domestic and global factors impacting business activities [1] - Expectations indicate a slowdown in growth as tariffs come into effect, suggesting potential challenges ahead for the UK economy [1]