FTSE 100 Up 0.16% After UK GDP Growth Accelerates, While Pound Dips to $1.3245

The FTSE 100 moved higher on Monday as investors welcomed stronger UK economic data and looked past ongoing global uncertainty. The benchmark index gained after official figures confirmed that the UK economy expanded faster than expected during the first quarter. At the same time, the British pound weakened against the US dollar, giving support to many export-focused companies listed on the index. Markets also remained alert to developments in the Middle East and expectations for future interest rate decisions.

FTSE 100 Rises After UK GDP Growth Confirms Economic Momentum

The FTSE 100 closed around 0.16% higher, supported by data showing the UK economy grew 0.7% quarter on quarter in the first quarter of 2025. The annual growth rate was confirmed at 1.3%, matching earlier estimates.

The figures from the Office for National Statistics showed that the UK recorded its strongest quarterly expansion in a year. Investors viewed the data as a sign that the economy entered the second quarter on firmer ground.

According to Investing.com, stronger domestic growth helped offset concerns about geopolitical tensions and uncertainty surrounding international trade negotiations. Why did the market react positively? Because stronger GDP growth improves confidence in corporate earnings and suggests businesses and consumers remained resilient despite higher borrowing costs.

FTSE 100 Gains Support as Pound Falls to $1.3245

The British pound slipped to around $1.3245 against the US dollar during trading. A weaker currency often benefits multinational companies in the FTSE 100 because overseas earnings become more valuable when converted back into pounds.

Global firms in sectors such as pharmaceuticals, energy, mining, and consumer goods were among those receiving additional support. Currency traders continued to monitor expectations for the Bank of England, with markets still pricing in further interest rate cuts later this year if inflation continues to ease.

Investors Continue Watching Global Risks Alongside Economic Data

Although UK economic data remained encouraging, investors stayed cautious about external risks. Markets continued following developments in the Middle East after reports of easing tensions between Iran and Israel.

Any renewed disruption to global energy supplies could quickly affect oil prices, inflation expectations, and overall investor sentiment. At the same time, traders are also watching upcoming UK inflation figures, labour market data, and central bank comments for fresh clues about monetary policy.

Will stronger GDP delay interest rate cuts? Not necessarily. While solid growth is positive, the Bank of England is expected to balance economic expansion with inflation trends before making future rate decisions.

FTSE 100 Outlook: What Investors Should Watch Next

The FTSE 100 continues to show resilience as stronger UK economic growth combines with support from a softer pound. The confirmed 0.7% quarterly GDP growth gives investors greater confidence that the UK economy remains on a stable path despite global uncertainty. However, markets are unlikely to focus on growth data alone. Inflation, wage growth, and future Bank of England policy decisions will remain equally important over the coming weeks. Global events, especially energy market developments and geopolitical risks, could also influence market direction. For long-term investors, the combination of improving economic activity, resilient corporate earnings, and supportive currency movements provides a constructive backdrop, although short-term volatility is still likely as new economic data and international developments emerge.

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