The UK’s upcoming GDP report could affect the British pound and Bitcoin in different ways. Strong economic growth would support the pound but put pressure on Bitcoin as traders adjust their interest-rate expectations.
The Office for National Statistics (ONS) will publish the UK’s GDP figures for July to September on November 12. The report comes just one week after the Bank of England (BoE) raised interest rates.
Economists expect the UK economy to grow by 0.7% in the third quarter, up from 0.5% in the previous quarter. The Bank of England also forecasts growth of 0.7%, although business surveys suggest a slower pace of around 0.2%.
Bank of England Rate Hike Supports Sterling
On November 5, the Bank of England raised interest rates by 0.25 percentage points to 4%. It was the first rate increase since 2023.
The decision was largely driven by energy price spikes amid the ongoing Middle East conflict. UK inflation reached 3.5% in September, and the central bank warned it could approach 5% by mid-2027.
The Bank of England also signalled that further rate increases remain possible if inflation stays elevated.
Stronger GDP figures would reinforce expectations that interest rates will stay higher for longer, supporting the British pound against the US dollar as investors seek better returns from UK interest rates.
However, what drives sterling’s strength matters. Growth fueled by stronger consumer spending, business investment and industrial activity signals a healthier economy and can attract more investors.
By contrast, a pound rally driven mainly by expectations of further rate hikes carries economic risks. Higher interest rates raise borrowing costs for households and businesses, slowing economic activity over time.
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GBP/USD and UK Bond Yields in Focus
Traders will closely watch the GBP/USD exchange rate and UK government bond yields after the GDP report.
On November 9, the British pound rose by around 0.5% against the US dollar, reaching $1.3421. The gain followed the Bank of England’s interest rate hike and improved market confidence as concerns about technology stocks eased.
Traders will also watch two important UK bond yields:
- Two-year gilt yield: Reflects investor expectations for the Bank of England’s near-term interest rate decisions.
- Ten-year gilt yield: Reflects longer-term expectations for inflation, economic growth and government borrowing costs.
The UK’s 10-year bond yield was around 5.13% on November 9, despite a small daily decline.
Stronger-than-expected GDP growth alongside rising two-year bond yields would signal that traders expect further interest rate increases.
However, sharp rises in both two-year and ten-year yields point to concerns about persistent inflation and higher borrowing costs, rather than confidence in economic growth alone.
Bitcoin Faces Additional Pressure
Bitcoin’s response to the UK GDP report will depend on bond yields, investor sentiment and broader financial market conditions.
When government bond yields rise, investors can earn more attractive returns from traditional assets. Bitcoin, which pays no interest, then faces greater competition for investment capital.
Higher UK yields could increase selling pressure on Bitcoin, particularly if investors cut their exposure to riskier assets.
However, a stronger pound does not automatically mean Bitcoin will fall. Bitcoin remains heavily influenced by US dollar movements and broader market conditions.
If sterling rises on stronger UK economic growth while risk appetite holds, Bitcoin’s reaction will be limited.
Conversely, weak economic growth coupled with high inflation would intensify stagflation concerns. This would weigh on the pound and complicate expectations for future central bank rate cuts.
What UK GDP Means for Sterling and Bitcoin
Thursday’s GDP figures will show whether the UK economy can sustain growth despite higher borrowing costs and rising energy prices.
For Bitcoin traders, the key question is whether stronger economic growth will improve market sentiment without prompting investors to retreat from risk assets.
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Related: How Wall Street Changed Bitcoin’s 2024–2026 Market Cycle
Source: coinedition.com. Adapted by NBTC.
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