Goldman Sachs (GS) appears cautiously optimistic over the European Central Bank’s (ECB) next move while turning more pessimistic over the UK’s economic transition, as per the latest analytics from the US bank.

GS maintains its ECB rate forecasts while suggesting that the terminal rate of 2.75% will be hit by March. “ECB commentary suggests council would like to slow pace,” adds Goldman.

On the other hand, the bank stated, "Folding in weaker growth momentum, significantly tighter financial conditions, and the higher corporation tax from next April, we downgrade our UK growth outlook further and now expect a more significant recession."

The GS now expects a 1% contraction in the UK’s Gross Domestic Product (GDP) for 2023 versus the previous forecast of -0.4%.

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