UK GDP grew 0.5% quarter-on-quarter in Q2 2026, revised up from 0.4% and above the 0.4% forecast, after 0.6% growth in Q1. Sterling reached a six-week high against the euro and recovered against the dollar as traders priced around 33 basis points of Bank of England tightening by year-end and more than 100 basis points by the end of 2027, although analysts said markets appeared overly hawkish. Prime Minister Andy Burnham’s October budget, fiscal-discipline commitments and comments that Britain should consider closer future relations with the European Union, including ultimately rejoining the bloc, are expected to remain key market drivers. Net trade led growth as export volumes rose 2.8%, while consumer spending increased 0.3%, business investment 1.8% and services output 0.6%; production fell 0.1% and government consumption declined 0.5%. The Office for National Statistics lowered its estimate of full-year 2025 growth to 1.2% from 1.3%.