UK GDP Contracts by 0.1% in May, Missing Expectations and Weighing on GBP/USD

UK GDP Contracts by 0.1% in May, Missing Expectations and Weighing on GBP/USD

Published: July 11, 2025
Category: Economic Data | GBP/USD | UK Economy

UK GDP Misses Forecast in May 2025

The UK Gross Domestic Product (GDP) declined by 0.1% MoM in May, according to data released Friday by the Office for National Statistics (ONS). This represents a continued economic contraction following April’s 0.3% drop and fell short of the 0.1% growth forecast by economists.

This disappointing data prompted a slide in GBP/USD, which fell below the 1.3550 mark during Friday’s Asian session.

Wider UK Economic Indicators Show Further Weakness

The broader UK economic indicators also disappointed:

• Index of Services (May): Rose only 0.4% (3M/3M) vs. 0.6% in April
• Industrial Production (MoM): -0.9%, missing estimates
• Manufacturing Production (MoM): -1.0%, also below forecasts

These figures indicate persistent headwinds for the UK economy across multiple sectors, casting doubt on the strength of any near-term recovery.

GBP/USD Falls as Traders React to Growth Concerns

The British Pound (GBP) weakened in response to the soft data, dropping against the US Dollar (USD) as traders priced in economic uncertainty and potential policy inaction from the Bank of England (BoE).

With inflation cooling and now growth stalling, market participants are closely watching upcoming economic indicators and BoE commentary for any shifts in monetary policy expectations.

Key Takeaways:

• UK GDP MoM for May: -0.1% (vs. expected +0.1%)
• Industrial and Manufacturing Output: Both negative and below forecast
• GBP/USD drops below 1.3550 as economic sentiment weakens
• Services sector also slows down

Related Tredu Coverage:

• GBP/USD Falls to 1.3550 as Economic Concerns Grow
• BoE Policy Watch: Is the UK Economy Losing Steam?
• UK Manufacturing Contracts Sharply in May