LONDON: Sterling rose on Friday after figures showed the UK economy slowing but in line with forecasts and still growing at a healthy pace, a relief for those worried that weakness overseas could be a heavier drag on activity. The pound moved further above $1.60 and on a broader trade-weighted basis was on track for its first weekly rise in four.
Britain's economy grew by 0.7 percent in the third quarter, down from 0.9 percent the quarter before but in line with economists' expectations, preliminary figures showed on Friday.
That put annual growth at 3.0 percent, also down slightly but among the fastest rates in the developed world, prompting British finance minister George Osborne to tweet: "The UK is leading the pack in an increasingly uncertain global economy." Sterling money markets continued to price a first interest rate rise by the Bank of England around the middle of next year, potentially the first post-crisis hike by any big central bank.
"With easing inflation providing a timely boost to real incomes, firms' employment and investment intentions still strong, and private sector balance sheets in improved health, the recovery seems unlikely to suddenly stall," said Samuel Tombs, senior UK economist at Capital Economics.
At 0900 GMT sterling was up a quarter of a percent against the dollar at $1.6065, and the euro was down a 10th of a percent at 78.78 pence.
This put sterling on course for its first weekly gain in four against the single currency and on a trade-weighted basis. From a chart perspective, sterling looks set to close the week on a strong footing too.
It is currently trading comfortably above a long-term technical support level at the 200-week moving average of $1.6016.
There is a degree of uncertainty surrounding the strength of the economic recovery, however, and by extension the timing of the BoE's first rate hike.
There are several reasons why British growth might continue to slow into the end of the year, including the recent burst of financial market volatility and growing signs of renewed stagnation in the euro zone.
A persistently wide current account deficit, deteriorating public finances and weak wage growth that dampens consumer spending are also factors.
Earlier this week, BoE chief economist Andy Haldane said he was "gloomier" on the economy, implying that interest rates could remain "lower for longer".
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