Sterling edges lower against dollar after UK data

Sterling slipped slightly against the dollar on Thursday after UK economic data showed stronger-than-expected growth in November, though the figures failed to shift expectations for Bank of England policy.
The pound was down 0.05% at $1.3443, trimming earlier losses of around 0.10%. Traders continued to price in roughly 40 basis points of BoE rate cuts by September.
UK gross domestic product recorded its fastest growth since June, helped by a return to full production at Jaguar Land Rover following a cyberattack that had disrupted the carmaker and its suppliers.
“Despite the upside surprise, it is important to note that the data are by no means strong,” said Kallum Pickering, chief economist at Peel Hunt. “Economic activity in the UK is, at best, lukewarm, lumpy and remains constrained mostly by a lack of confidence in the policy decisions of the Labour government.”
The dollar strengthened as markets set aside concerns over the Federal Reserve’s independence and refocused on incoming economic data.
“The big picture remains that the UK economy has lost momentum since the summer,” said Andrew Wishart, economist at Berenberg. He added that job losses and fiscal consolidation could persist into 2026, weighing on inflation and allowing the BoE to cut rates more aggressively than markets currently expect.
Analysts said investors are increasingly turning to economic data after the boost to sterling from easing fiscal and political risks faded following Finance Minister Rachel Reeves’ November budget.
The next UK inflation data is due on January 21. The euro rose 0.15% to 86.54 pence. — Reuters