UK GDP Preview: Pound at Risk as Mann Signals Weak Demand
Article published on February 11th, 2025 8:33AM UK Time
The upcoming UK GDP print on Thursday morning carries heightened significance following the latest remarks from Bank of England (BoE) Monetary Policy Committee (MPC) member Catherine Mann. A known hawkish dissenter, Mann surprised markets at the last MPC meeting by voting for a 50 basis point rate cut, double the 25bp reduction implemented by the BoE.
Her shift signals growing concerns about weakened demand conditions in the UK economy. On Tuesday, February 11, she reinforced this stance, stating that inflation risks have diminished as corporate pricing power weakens and price pressures align closely with the BoE’s 2% target. With demand cooling, the GDP release will be a key data point in shaping rate expectations and currency movements.
Market Implications: Sterling Vulnerable to a GDP Miss
Given Mann’s change in stance, a weaker-than-expected GDP print could trigger a sharp downside move in GBP, reinforcing expectations of further easing from the BoE. Markets will pay close attention to:
- Headline GDP Figures: A broad downside miss—especially below the market’s minimum expectations—would amplify concerns about economic fragility.
- Demand Narrative: With Mann already highlighting demand risks, further weakness in economic output could solidify expectations for deeper rate cuts, undermining the pound.
Key Trade Takeaway
If GDP disappoints and services remain stable, expect a sharp pound selloff as markets increasingly price in a more aggressive BoE easing cycle. However, if services also miss, the flush lower in GBP could be even more pronounced, as it would reinforce concerns that the UK economy is slowing more quickly than anticipated.
Traders should be prepared for heightened volatility, particularly in GBP/USD and EUR/GBP, as the market reacts to the latest economic reality and shifting central bank expectations. With the UK economy facing slowing growth and persistent inflation risks, the BoE’s policy path remains uncertain. However, this latest vote split suggests that the dovish camp is gaining ground. If upcoming data prints confirm economic weakness, expectations for earlier and deeper rate cuts could solidify, reshaping market positioning on UK assets and the pound in the months ahead.