FX.co ★ British Pound Edges Down After Weak GDP Data

The British pound slightly declined to just below $1.34 following new data revealing an unexpected 0.1% contraction in the UK's GDP for October. This marks the fourth straight month without growth and defies predictions of a 0.1% increase. Despite these underwhelming figures, the sterling remains close to its two-month peak and is set for a 0.5% weekly gain. This resilience is largely due to the weakened dollar after the Federal Reserve's recent 25 basis point reduction of the fed funds rate, a move that was widely anticipated, along with signals of an additional rate cut expected next year. Looking forward, the Bank of England is scheduled to meet next week, with investors almost 90% certain of a 25 basis point cut to 3.75%. Such a decision would represent the fourth rate reduction this year, lowering borrowing costs to their lowest since 2022.