The United Kingdom economy is showing signs of cooling after a robust start to 2026, according to Deutsche Bank economists Sanjay Raja and Maui Brennan. They project UK GDP contracted modestly in July following several months of strong expansion earlier this year. The anticipated slowdown is primarily driven by weakness in both services and production sectors, while construction activity is expected to show only marginal gains.
This deceleration marks a notable shift in momentum for the British economy, which had outperformed expectations in the first half of 2026. The services sector, which accounts for roughly 80 percent of UK economic output, appears to be losing steam alongside manufacturing and industrial production. Traders should monitor upcoming official GDP data for confirmation of this trend, as it could influence Bank of England policy decisions and sterling positioning in forex markets.
FXnCO Insight
Sterling may face near-term pressure if official July GDP data confirms the Deutsche Bank forecast, presenting potential shorting opportunities against major currencies ahead of the next Bank of England meeting.
Source: FXStreet