Sterling reversed small losses on Friday to trade flat after British economic growth for the third quarter was left unchanged and the year-on-year number was revised higher, with traders avoiding big positions before the holiday period. The prospect of further protracted negotiations to seal Britain's exit from the European Union next year has weighed on the currency in December, although the pound is still up in the last two months after gaining about 4 percent in November.
Britain's Office for National Statistics (ONS) said economic growth for the July to September was 0.4 percent, unchanged from the previous reading and in line with the consensus. Year-on-year economic growth was revised up to 1.7 percent from an earlier 1.5 percent. "There's been a bit of a push higher [for sterling]. I don't think it's as big a move as it deserves. The numbers were good," said David Madden, an analyst at CMC Markets.
The pound was flat against the dollar at $1.339 after it had weakened ahead of the data. It was up 0.2 percent against the euro at 88.46 pence after earlier trading flat versus the single currency. The pound has been stuck in a tight trading range against the dollar in December, and analysts said sterling needed a jolt to move out of the range.
"This could be the uplift sterling needs to move to the next gear," Madden said. Some traders believe the pound will rally in 2018 if Britain agrees a Brexit transition deal and talks with the European Union progress faster than expected.
"The pound has been down on its luck amid a tough post-Brexit referendum backdrop. But the year ahead should see GBP bulls holding onto what they've got - especially now that we're technically 'halfway there' when it comes to resolving Brexit," ING said in a note.
Comments
Comments are closed for this article.