LONDON: The pound fell on Wednesday, after data showed the UK economy shrank in October, which could strengthen the case for the Bank of England to signal at its meeting this week that it may cut interest rates sooner than many currently believe.

The Office for National Statistics said UK gross domestic product contracted by 0.3% in October, against forecasts for a no change.

Sterling was last down 0.2% on the day at $1.2531, having traded around $1.2549 right before the GDP data.

Sterling struggles against stronger dollar

So far this year, the pound has risen by around 3.8% against the dollar, marking its best annual performance since 2019, driven in large part by an expectation that the Bank of England could be much slower in cutting rates than other central-bank counterparts.