Closing summary: Strong data in UK and US suggest later interest rate cuts
The UK economy grew by 0.3% in the second quarter of 2025, the Office for National Statistics said.
That was higher than the 0.1% expected by economists polled by Reuters, and may mean the Bank of England holds off on cutting interest rates until next year, according to some economists.
The increase came despite UK goods exports to the US slumping by 13.5% in the second quarter compared with the same period a year earlier, as the effects of Donald Trump’s tariffs became clearer. The British Chambers of Commerce (BCC) said it was the lowest UK exports to the US in three years, when trade was heavily disrupted by the coronavirus pandemic.
The UK was not the only country to report “hot” data that will give central banks pause before cutting interest rates. In the US producer price index inflation surged in July, up 0.9% in the month, and 3.3% higher than a year earlier, according to data published on Thursday by the Bureau of Labor Statistics.
Traders pulled back on bets of a bigger cut than usual – of half a percentage point – at the Federal Reserve’s next meeting in September. Reuters reported:
The dollar index gained 0.2% from an over two-week low […] while benchmark 10-year yields edged up from a one-week low.
Stronger US wholesale price data tempered bets on a larger, half-point cut next month. Traders are now leaning toward a quarter-point move with another in October, reinforcing comments from Fed’s Mary Daly that such a large cut is not needed.
In other business and economics news today:
Admiral Group shares jumped 5% profit before tax rose by 69% to £521m, as it shrugged off falling car insurance prices.
Aviva’s share price jumped after the insurer also reported strong earnings for the first half of 2025 and said its integration of Direct Line was going well.
Claims of an exodus of wealthy “non-doms” in response to tax rises may be overblown, according to a report that suggests the number leaving the country is in line with official forecasts.
Industrial production fell by 1.3% in the eurozone in the year to June, according to figures published by Eurostat.
Short sellers are betting that baked goods chain Greggs has reached its peak.
National Grid has agreed a £1.7bn deal to sell its Grain LNG business to British Gas owner Centrica and US private equity group Bridgepoint.
You can continue to follow our live coverage from around the world:
Thank you for joining me today, and please do tune in tomorrow when Lauren Almeida will be in the hot seat. JJ
Wall Street has followed the lead of the FTSE 100, falling at the opening bell. (NB, other European indices are so far in the black today).
Here are the opening US stock market index snaps, via Reuters:
S&P 500 DOWN 19.56 POINTS, OR 0.30%, AT 6,447.02
NASDAQ DOWN 73.80 POINTS, OR 0.34%, AT 21,639.34
DOW JONES DOWN 198.80 POINTS, OR 0.44%, AT 44,723.47
That inflation data may well have had something to do with it: if inflationary pressure builds, then the Federal Reserve is less likely to cut interest rates – whatever Donald Trump may believe.
