Strong third-quarter GDP growth of 0.7% quarter-on-quarter, the fastest pace since early 2024 and driven primarily by services sector expansion including AI-related investment in computer programming and IT, has anchored trader consensus around 1-2% annual UK GDP growth for 2026 at 90.5% market-implied odds. Official data showed the economy expanding 1.9% year-on-year in Q3, extending resilience through the first three quarters despite higher energy costs and borrowing rates, prompting the Bank of England to upgrade its 2026 forecast to 1.6%. This positioning reflects the limited scope for a sharp Q4 reversal given current momentum, though scenarios such as sustained inflation above 3.5% prompting further monetary tightening or weaker consumer spending could still shift outcomes toward the low-probability 0-1% range.
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