UK GDP disappointed for a second straight month in May, reinforcing the Bank of England’s view that underlying growth is largely stagnant after earlier distortions from tariffs and housing. For now, sterling is unmoved, but next week’s jobs data could prove pivotal for BoE rate cut expectations, ING's FX analyst Francesco Pesole notes.

BoE may face pressure on cuts

"UK May GDP was disappointing, recording a second consecutive fall against consensus expectations of a small rise. The truth is these figures are highly volatile, in part because the first quarter was boosted by tariff frontloading and home sales ahead of the Stamp Duty hike in early April."

"The Bank of England looked through the spike in Q1 GDP, concluding instead from the broader survey data that underlying activity was more or less flat. We'll get more colour in next Thursday's jobs report, and if things are bad, it would put serious pressure on the BoE to speed things up on rate cuts. However, sterling opens unchanged this morning, suggesting a similar market view."