UK income growth revised upwards as markets hail ‘resilient’ economy

AI desk brief

UK growth and income revisions point to a more resilient economy, but the main metals takeaway is a slightly hawkish BoE read-through: traders are speculating the economy is running hot enough to justify higher rates, with inflation still at 3.1% versus the 2% target. Sterling hit a six-week high against the euro and edged up versus the dollar to $1.3292, while 2y gilt yields eased 5bp to 4.86% and 10y yields fell 4bp to 5.356% on the stronger data and lower global oil prices.

The article also ties the resilience to the Middle East conflict and prior energy-price shocks, but recent easing in oil is tempering bond markets. Near term, the combination of firmer sterling and higher-for-longer UK rate expectations is modestly negative for precious metals, although lower global oil prices and softer gilt yields partially offset that.