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    The UK’s third-quarter current account deficit was £12.1 billion, exceeding expectations.

    by VT Markets
    /
    Dec 22, 2025
    The United Kingdom’s current account deficit for the third quarter was £12.1 billion. This is a big improvement compared to the expected deficit of £21.3 billion. A smaller deficit suggests that trade or financial flows are performing better than anticipated. This indicates that the UK’s economic dealings with the world are strong.

    Impact on Economic Planning

    The difference between the forecast and actual figures may change how policymakers plan the economy and set budgets. They can use this information to evaluate current economic conditions and make needed adjustments. The UK’s smaller current account deficit for the third quarter of 2025 is great news for the economy. A smaller deficit helps strengthen the pound sterling. This newfound strength should support the currency as we move into the new year. This news bolsters the case for optimism in the pound on the currency markets. Traders might start buying GBP/USD call options in anticipation of its rise or selling put options since the downside now seems limited. This positive sentiment is backed by recent data from the Office for National Statistics in early December 2025, showing an unexpected increase in export orders, especially in the services sector.

    Possible Effects on Interest Rates

    The smaller deficit could also affect the Bank of England’s decisions on interest rates. With inflation stubbornly stuck at 2.8% as of November 2025, a stronger economy reduces the likelihood of the Bank needing to cut rates in the first half of 2026. We can expect traders to adjust interest rate swaps and SONIA futures, anticipating a longer period at the current base rate of 4.5%. In the stock market, this news suggests the UK economy is doing better than previously thought, which is a plus for homegrown companies. We might see more interest in call options on the FTSE 250 index. This is a noteworthy improvement from the worries we had back in 2023 and 2024 about the UK’s twin deficits. Create your live VT Markets account and start trading now.

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