FTSE 100 climbs after July GDP surprise; oil eases

FTSE 100 edged higher on Friday after the Office for National Statistics released data showing the UK economy grew by 0.4 per cent in July, outpacing the zero‑growth forecast that many analysts had pencilled in.

Growth data sparks market rally

The surprise expansion followed a 0.3 per cent annual rise last year, buoyed by a summer of World Cup enthusiasm and unusually warm weather that lifted hospitality and leisure spending. Investors cheered the resilience, sending blue‑chip shares into modest gains.

Implications for monetary policy

Economists now expect the Bank of England to keep interest rates steady at its upcoming meeting, with a possible 0.25 per cent hike in November if inflation remains sticky. Felix Feather, an economist at Aberdeen, said:

Economic activity has held up surprisingly well against the effects of the energy cost shock so far, with the data persistently outperforming expectations.

Danni Hewson, head of financial analysis at AJ Bell, warned that raising rates “won’t lower geopolitical tensions or bring down international energy prices, but it does risk weakening domestic demand at exactly the moment households and businesses are struggling to maintain a recent uptick in confidence.”

Oil markets reacted modestly, with Brent crude slipping about one per cent to $106 a barrel, still the highest level since May, after a sharp rally the previous day.

Looking ahead

The upbeat growth figures could temper calls for an immediate rate cut, but they also raise the spectre of higher borrowing costs later in the year. A rise in gilt yields has already sparked talk of an emergency budget as the Treasury braces for tighter fiscal conditions. With the October budget on the horizon, business leaders are pressing the chancellor for cost‑saving measures, a theme explored in recent coverage.

In short, the FTSE 100’s bounce reflects renewed optimism about the UK’s short‑term growth trajectory, but the path forward will hinge on how the Bank of England balances inflation pressures against the economy’s surprising stamina.