UK GDP is set to show that the economy continued growing in Q3

• The UK GDP is expected to show stronger economic growth in Q3. 
• The Gross Domestic Product is seen accelerating further in the three months to September, boosted by strong manufacturing activity.
• The Pound Sterling against the US Dollar maintains a near-term positive trend, with bulls focusing on the 1.3500 area.

The highlight of the United Kingdom’s (UK) economic calendar this week will be the preliminary estimate of third-quarter Gross Domestic Product (GDP), which the Office for National Statistics will release on Thursday. The market is bracing for 0.7% growth in the three months to September, following 0.5% growth in the second quarter of 2026, with the annual rate accelerating to 1.9%, from 1.4% in the previous month.

Strong Industrial Production data, which is expected to have grown 3% in the 12 months to September, from 1.6% in August, is seen as one of the main drivers of the UK’s economic growth, which, if confirmed, would provide a favourable background for the Bank of England’s (BoE) monetary policy to extend the tightening cycle started last week.

UK GDP forecast: What numbers could tell us

Recent macroeconomic figures from the UK have shown surprising resilience to uncertainty from the war in the Middle East and higher Oil prices, which has improved market expectations about economic growth in the third quarter.

Monthly GDP data from August beat expectations last month, with the economy growing  0.1%, against market expectations of a 0.1% decline, thanks to the strong performance of the manufacturing sector. Factory output grew 0.8% in August, largely offsetting the flat performance of the services sector and a 0.2% decline in construction output.

Beyond that, UK Manufacturing and Services Purchasing Managers’ Index (PMI) figures revealed that business activity continued growing in October, while unemployment declined to its lowest rate since July last year. All in all, a fairly healthy macroeconomic picture, which has prompted the International Monetary Fund to raise the UK's growth projections for 2026 to 1.3% from the previous 1%.

On the political front, a neutral UK budget has contributed to the economic bonanza, calming fears about the hefty public debt, at least for now, and providing support to the British Pound. Lower charges on food and energy bills are expected to be paid for by higher taxes on banks and gambling companies. The feared bond markets have not shown any significant objection to these plans.

All this acknowledged, the third quarter’s GDP report will be analysed with particular attention after last week’s Bank of England rate hike. Economic growth is not a specific target of the BoE’s mandate, but a healthy GDP will doubtless make the central bank’s rate-setting work much easier, considering the stubbornly high consumer inflation data.

Last week, the BoE tightened its monetary policy for the first time in three years. Some policymakers, including Governor Bailey, suggested the bank might need to hike rates further to bring inflation to target. BoE’s Deputy Governor, Clare Lombardelli, went further on Tuesday, affirming that she “would not rule out rate hike possibility in December”. Against this backdrop, a strong GDP reading on Thursday would endorse those views and might spur speculative demand for the Pound.

When will the UK release Q2 Gross Domestic Product, and how could it affect GBP/USD?

As noted, the UK will release the preliminary Q2 GDP estimate on Thursday at 07:00 GMT. Data is expected to show moderate economic growth in the three months to June, with the GBP/USD risk skewed to the upside, as a stronger-than-expected reading will boost odds of another BoE rate hike, most likely in February.

The GBP/USD pair trades around 1.3320 at the time of writing, following a sharp reversal on Tuesday, as strong US inflation data and hawkish comments by Fed speakers boosted the US Dollar across the board. Bears have pushed price action below the bottom of the ascending channel from October, and momentum indicators on the 4-hour chart have turned bearish, with the Relative Strength Index (14) approaching oversold levels and the Moving Average Convergence Divergence (MACD) histogram showing widening red bars. 

According to Guillermo Alcalá, FX Analyst at FXStreet, “Recent GBP/USD price action suggests that the corrective recovery from mid-October lows might have come to an end, and that the pair is ready to resume the broader bearish trend.”

“While below the channel bottom and the November 6 low, near 1.3340, bears are likely to be tempted to revisit the late October lows near 1.3270, with their gaze on the key resistance area near 1.3130,” says Alcalá.

On the upside, Alcalá argues that “The pair would need to return above the broken trendline support, now around 1.3380, to ease bearish pressure, and shift the focus back towards the November 10 high near 1.3460 and the November peak, in the 1.3500 area.”