Pound rises against weaker dollar as UK GDP unexpectedly rises
SPY•Sterling rose 0.5% to $1.3253 as the dollar weakened, while UK GDP grew 0.1% in August, against economists’ forecast for a 0.1% decline.
1. Sterling gains
Sterling was headed for its biggest daily rise against the dollar since mid-August, last up 0.5% to $1.3253. The dollar slipped 0.15% as lower U.S. Treasury yields and stock market jitters weighed on it. Sterling was steady against the euro at 84.60 pence.
2. GDP beats forecasts
UK gross domestic product increased 0.1% in August, the Office for National Statistics reported, against a Reuters poll forecast for a 0.1% decline. A further jump in computer programming offered fresh evidence that AI was boosting growth.
3. Economic outlook
Deutsche Bank chief UK economist Sanjay Raja said there were signs the economy was slowing from its pace in the first half of the year, while noting its resilience. Finance Minister John Healey said the budget later this month would include measures to reinforce economic resilience to the Iran war energy price shock and would meet fiscal rules. Bank of England Deputy Governor Sarah Breeden said companies’ cost-cutting in response to the energy shock would make it easier to contain inflation; markets were pricing in at least one 25-basis-point rate increase by year-end.
