Data show that the UK's GDP grew by 0.6% in the second quarter, and the UK's economic growth expectations have risen, which may continue to support the pound

This is down slightly from 0.7% in the previous quarter, but in line with expectations and still at the high end of the typical range of outcomes before and after the epidemic. However, this expansion tapered off in June, with GDP growth at 0%, indicating the economy was losing steam near the end of the quarter, which has some worried about downside risks ahead.

(One-hour chart of the pound against the dollar)

foreign exchange trading platformdooprime"Downside risks to UK GDP growth remain significant as the labour market appears set to continue to ease gradually," said Michael Brown, senior research strategist at the UK Treasury.

Mr. Brown added: "At the same time, fiscal policy also looks set to tighten significantly in the fourth quarter, as Chancellor Reeves seeks further spending cuts and big tax increases - effectively a return to austerity."

The data put an end to the technical recession that unfolded in the second half of last year, but also served as a reminder that downside risks remain to the UK's economic outlook, particularly as the service sector, the backbone of the economy, shrank again in June.

Ashley Webb, analyst at Capital Economics, said of the data: "At the very least, it may give the BoE some reassurance that the recent strength in economic activity will not prevent further declines in service sector inflation."

He added: "UK GDP figures, combined with weaker service sector inflation in July, support our view that interest rates will fall from 5.00 per cent now to 3.00 per cent by the end of next year."

Thursday's data was the latest in a series of positive economic reports from the UK. Inflation data on Wednesday was lower than expected and employment data on Tuesday was better than expected. The next big event is retail sales data for July, due on Friday.

Trading platform Ebury said that data showed that the UK's GDP grew by 0.6% in the second quarter, and the UK's economic growth expectations rose, and the pound may continue to be supported.

Matthew Ryan, strategist at Ebury, said in a note that the data proved that market participants and the Bank of England had been "very pessimistic" in their growth forecasts in recent months. He said investors and economists now expected the economy to grow much faster in 2024 than previously expected. However, near-term challenges remain, not least uncertainty over the Bank of England's timetable for rate cuts and market confidence in the New Labour government, which had experienced a period of relative instability at the start of its tenure.