Deutsche Bank analysts warn growth risks are mounting for the UK economy despite strong first-half performance that saw GDP climb 0.4% quarter-on-quarter through spring, according to strategist Sanjay Raja. Annualised growth hit 2% in the first six months of the year, marking robust momentum. However, the German bank now signals increasing downside threats to this trajectory as economic headwinds intensify.
The warning comes as traders and policymakers navigate uncertainty around consumer spending, inflation persistence, and global economic conditions that could dampen the UK’s growth outlook. While recent data showed resilience, Deutsche Bank’s shift in risk assessment suggests the strong spring performance may not be sustainable into the second half. Sterling positions and UK equity exposure face heightened volatility as market participants digest deteriorating growth prospects despite positive backward-looking indicators.
FXnCO Insight
Traders should prepare for increased GBP volatility and consider defensive positioning in UK assets as near-term growth momentum faces mounting downside risks despite strong H1 performance.
Source: FXStreet