LONDON: Sterling weakened on Thursday after news that Britain’s economy grew by a slower-than-expected 1.1% between August and September, a pace that leaves the UK lagging other rich nations attempting to recover from the coronavirus pandemic.
The number was all the more disappointing because the period measured was before the latest Covid-19 restrictions on businesses took effect.
GDP figures showed that in the July-September quarter, the economy grew by a record 15.5% from the previous three months.
Still, this number marginally missed expectations as well, as economists polled by Reuters were looking for 15.8% growth.
“The weaker than expected print will put the brakes on the recent sterling rally and will provide a reality check for the market and will highlight lingering headwinds for the pound in the form of ongoing Brexit negotiations and the growing economic impact of the pandemic,” said Sam Cooper, Vice President of Market Risk Solutions at Silicon Valley Bank.
Britain reached a bleak milestone in its battle with the coronavirus on Wednesday as the official death toll passed 50,000, casting a shadow on news about the effectiveness of a potential vaccine announced on Monday.
Finance minister Rishi Sunak said steps to restrict the spread of Covid-19 were likely to have slowed economic growth since September. The pound was down by 0.6% against the dollar at $1.3139 and by 0.9% against the euro, last trading at 89.88 pence.—Reuters