Pound Sterling faces pressure on disappointing UK Q3 GDP, labour data
The Pound Sterling (GBP) continues to underperform its major currency peers as weaker-than-projected United Kingdom (UK) preliminary Gross Domestic Product (GDP) data has prompted further economic concerns.
On Tuesday, the UK's economic uncertainty escalated after the release of the labour market data for the three months ending September, which showed that the Unemployment Rate accelerated to 5%, the highest level seen since February 2021.
During the European session, the UK Office for National Statistics (ONS) reported that the economy expanded 0.1% in the third quarter of the year, slower than estimates of 0.2% and the 0.3% growth seen in the second quarter. On an annualized basis, the UK economy grew at a moderate pace of 1.3%, against expectations and the prior release of 1.4%.
Month-on-month, the UK economy contracted by 0.1% in September, while it was expected to remain flat. Meanwhile, Manufacturing and Industrial Production have declined at a stronger-than-projected pace in September after rising in August. On month, the Manufacturing and Industrial Production dropped by 1.7% and 2%, respectively.
Signs of slowing UK economic growth and declining factory activity would further intensify market speculation that the Bank of England (BoE) will cut interest rates at the December monetary policy meeting, which accelerated after soft job market data.
On the political front, several British media outlets have stated that the allies of Prime Minister Kier Starmer are conspiring to oust him ahead of the Autumn Budget, which is scheduled to be unveiled later this month. Starmer’s ousting at times when the UK economy is facing higher fiscal debt risks would lead to political instability, an event that might boost gilt yields.
Source : Fxstreet.com
