FX.co ★ Sterling Remains Under Pressure Despite Strong UK GDP

Sterling remained under pressure, trading below the $1.33 level and hovering near its lowest point since mid-October, as investors weighed stronger-than-expected UK economic data against continued support for the US dollar from expectations of further Federal Reserve tightening. Oil prices also steadied, with Brent crude regaining some momentum after recent sharp declines.

Data from the ONS showed the UK economy expanded by 0.7% in the third quarter, up from 0.5% in the previous quarter and in line with forecasts. Annual growth accelerated to 1.9% from 1.4%, while GDP for September alone rose 0.2%, beating expectations. The resilient figures bolstered bets on additional Bank of England tightening, with markets now pricing in another rate increase before year-end and a further hike by March.

In the US, stronger-than-expected inflation data and hawkish commentary from Federal Reserve officials reinforced expectations of a December rate hike and raised the risk that policymakers could opt for a more aggressive 50-basis-point move.