UK GDP Beats Expectations, US Retail Sales and Jobless Claims Ahead

UK GDP data for March surprised to the upside, beating expectations across nearly all components and underscoring the economy's resilience ahead of the recent US-Iran conflict. The solid performance suggests the UK economy entered the second quarter with strong momentum, although the geopolitical backdrop has since darkened.

For interest rate traders, the data reinforces the Bank of England's cautious stance. A resilient economy reduces the urgency for rate cuts, especially if inflation remains sticky. However, the escalation of the US-Iran conflict introduces new uncertainty around energy prices and global demand, which could complicate the BoE's policy path. Traders should monitor the UK gilt yield curve for any repricing of rate expectations. For current pricing on UK rates and other instruments, check NowPrice's rates page.

Looking ahead, the focus shifts to the US session with retail sales and weekly jobless claims. Retail sales are expected to slow from the prior month's strong pace, with the control group forecast at 0.4% month-on-month versus 0.7% previously. A weaker print could reinforce expectations of a Fed pause or cut, while a strong number might keep the hawkish bias alive. Jobless claims will provide a timely read on labor market conditions. The Spanish final CPI is also due but is unlikely to move the ECB needle.