Sterling set for rise as UK economy bounces back in November

[LONDON] Sterling rose on Friday (Jan 16), and was set for its fifth consecutive weekly rise against the euro, after data this week showed that the British economy grew more strongly than expected in November.

The pound was up 0.13 per cent at £1.3402. It was on track for a 0.3 per cent weekly rise, after two consecutive weekly declines.

The euro edged 0.06 per cent lower against the pound, and was set for its fifth straight weekly decline.

Data on Thursday showed that the UK gross domestic product recorded the fastest growth in November since June, boosted by a return to full production at Jaguar Land Rover after a cyberattack that hit the carmaker and its suppliers.

Economists said the figures also suggested that nervousness about Finance Minister Rachel Reeves’ annual Budget statement on Nov 26 had not affected output as much as feared.

Investors continued to almost fully price in two quarter-point interest rate cuts by the Bank of England (BOE) in 2026.

But markets are not fully pricing in a 25-basis-point reduction until June, and they see only a 6 per cent chance of a cut when the central bank meets in February.

“Sterling received a modest leg up on the (GDP data) news, and could be poised for further gains should the upbeat data dampen the likelihood of further BOE rate cuts,” said Matthew Ryan, head of market strategy at global financial services firm Ebury.

Analysts said investors were turning to economic data, as the boost fades from easing UK fiscal and political risks that supported the sterling since Reeves unveiled the November Budget.

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The next round for the release of the UK consumer price index inflation data is not scheduled until Jan 21. REUTERS