\u200b\u200b\u200bUK GDP surprise shifts rate cut expectations<\/p>\n
\u200bUnited Kingdom (UK) gross domestic product (GDP)<\/a> rose 0.3% in November, comfortably beating all forecasts and marking a clear rebound from October’s contraction. The data was driven primarily by stronger services and manufacturing output, suggesting the economy has more momentum than many had expected heading into year-end.<\/p>\n \u200bThe surprise has immediate implications for forex trading markets<\/a>. Sterling<\/a> stabilised against the US dollar<\/a> following the release, with three-month growth also surprising to the upside after an upward revision to October’s figures. This kind of data revision matters more than many realise.<\/p>\n \u200bTraders have responded by paring back Bank of England (BoE) rate cut expectations. Around 46 basis points of cuts are now priced for 2026, down from earlier levels. This represents a meaningful shift in sentiment, though it’s worth noting that markets remain far from pricing in a hawkish stance.<\/p>\n \u200bThe question now is whether this growth can be sustained. One strong month doesn’t make a trend, and the UK economy has a habit of disappointing just when optimism builds. But for now, the data provides some breathing room for policymakers and a modest tailwind for UK assets.<\/p>\n \u200bPub operators shine while retailers struggle<\/p>\n \u200bCorporate updates painted a mixed picture of the UK consumer.\u00a0Mitchells & Butlers<\/a> reported strong festive trading, with like-for-like sales up 4.5% over 15 weeks. The pub operator is clearly managing to drive volume growth while maintaining pricing power across both food and drink.<\/p>\n \u200bFuller Smith & Turner\u2019s<\/a>\u00a0echoed this strength, posting 5.3% like-for-like sales growth over 41 weeks. The group’s confidence was underscored by its announcement of a further share buyback of up to one million A shares<\/a>. When companies are buying back stock<\/a>, they’re signalling confidence in their outlook and balance sheet.<\/p>\n \u200bRetailers faced a tougher time.\u00a0Dunelm<\/a> warned that profit would land at the low end of expectations after a weak Christmas period. This suggests consumers are becoming more selective, choosing experiences over goods.\u00a0Taylor Wimpey<\/a> also flagged challenges, noting that pre-Budget uncertainty weighed on 2026 orders and margins.<\/p>\n \u200bUS tech rotation weighs on Wall Street<\/p>\n \u200bUS equities ended lower, led by a 1% fall in the Nasdaq 100<\/a> as investors rotated out of tech. The\u00a0S&P 500<\/a> slipped 0.5% while the\u00a0Dow Jones<\/a> edged down just 0.1%. This kind of divergence between indices tells you something about where the selling pressure is concentrated.<\/p>\n \u200bFinancials were among the weakest sectors despite some banks beating estimates.\u00a0Wells Fargo<\/a> fell 4.6% on a fourth quarter (Q4) miss, while\u00a0Citi<\/a> and\u00a0Bank of America<\/a> also declined amid profit-taking and concerns over a proposed US credit card rate cap. When even good results can’t prevent selling, it’s a sign that positioning and sentiment matter more than fundamentals in the short term.<\/p>\n \u200bThe sector rotation from technology into consumer staples and energy reinforces signs of a shift towards more defensive and cyclical areas. This doesn’t necessarily mean a bearish turn for the broader market, but it does suggest investors are reassessing valuations and looking for better risk-reward elsewhere.<\/p>\n \u200bCommodities retreat as geopolitical tensions ease<\/p>\n \u200bOil prices slid nearly 3% after Donald Trump signalled no immediate action against Iran. This is a reminder that geopolitical risk premiums can evaporate as quickly as they appear.\u00a0Crude oil<\/a> pulled back about 3.4% as traders reassessed the likelihood of supply disruptions.<\/p>\n \u200bGold<\/a> and silver<\/a> retreated from recent record highs as geopolitical risk premiums faded. Gold eased 0.5% from its record, while silver also gave back gains. For those looking to trade gold, this pullback may represent a healthier consolidation after the recent surge.<\/p>\n \u200bThe moves in commodities markets highlight the importance of understanding what’s driving prices. Trump’s comments removed one potential catalyst for higher oil prices, at least temporarily. But the underlying supply-demand dynamics haven’t fundamentally changed.<\/p>\n \u200bAsian markets follow US tech weakness<\/p>\n \u200bWeakness in US tech stocks<\/a> carried into Asia, dragging the\u00a0Nikkei 225<\/a> down 0.9% and weighing on Taiwan and Hong Kong. This contagion effect is typical when major US tech names sell off, given their weight in global portfolios and their influence on regional tech sectors.<\/p>\n \u200bBroader indices such as Japan’s Topix and South Korea’s KOSPI held near record highs despite the tech weakness. This suggests the rotation theme is playing out globally, not just in the US. Investors are looking beyond the largest tech names for opportunities.<\/p>\n \u200bThe\u00a0Japanese yen<\/a> rebounded from a 1.5-year low amid renewed intervention warnings from Japanese officials. Currency<\/a> moves like this can have significant implications for exporters and for those trading Japanese equities. A stronger yen tends to weigh on export-focused companies.<\/p>\n