Sterling steady after UK GDP data; Fed official up next
TLT•Sterling was down 0.06% at $1.3271 after UK GDP grew 0.7% in the third quarter, matching expectations and marking its fastest pace in two and a half years. Markets awaited comments from New York Fed President John Williams, with a December Fed rate increase widely priced in.
1. UK growth and sterling
Sterling was little changed after official data showed UK GDP grew 0.7% in the third quarter, in line with expectations. It was down 0.06% at $1.3271 and edged up to 83.57 pence per euro, near May 2025 highs. Kenneth Broux of Societe Generale said the figures supported the Bank of England’s decision to raise rates last week and reflected momentum in AI rollout and services.
2. Rate outlook
Markets assign roughly a 75% chance of another Bank of England rate hike in December, while money markets price in three more increases by December 2027 and about a 50% chance of a fourth. Investors were also watching comments from New York Fed President John Williams after hotter-than-expected US inflation and hawkish comments from Fed officials. Markets were overwhelmingly pricing in a 25-basis-point Fed rate increase in December, with investors divided over January.
