BoE Hikes Loom as UK Economy Beats Growth Expectations

The Bank of England is expected to raise interest rates as many times as four within the next year, despite surprise economic growth in July. The central bank is likely to be boosted by the GDP figures released this morning, which showed the UK economy growing by 0.4% in July.

Economists had predicted that growth would slow down due to summer spending boosts caused by heatwaves and the World Cup, but instead, the economy performed stronger than expected. This adds weight to the argument for an interest rate hike before Christmas, although it's still uncertain whether the Bank of England will act.

Money markets are pricing in four quarter-point hikes by July next year, which would see the Bank rate rise from 3.75% today to 4.75%. The central bank is expected to leave rates unchanged when it meets next week, but Andrew Bailey is widely tipped to oversee an interest rate hike in November.