The British pound is under significant pressure, trading near a seven-month low against the dollar and a two-and-a-half-year low against the euro. Weaker-than-expected economic data has fueled speculation of an imminent interest rate cut by the Bank of England. Political uncertainty further compounds the negative sentiment, contributing to market jitters.
- The British pound hovered around $1.31, near its seven-month low.
- It touched a two-and-a-half-year low against the euro.
- UK economy grew just 0.1% quarter-on-quarter in Q3, down from 0.3% in Q2.
- September GDP contracted 0.1% month-on-month.
- The jobless rate hit a four-year high.
- Pay growth slowed to its weakest since early 2022.
- Reports of a failed attempt to challenge Prime Minister Keir Starmer’s leadership unsettled investors.
The data paints a bearish picture for the British pound. Economic growth is slowing, unemployment is rising, and wage growth is decelerating, all suggesting a weaker economic outlook. This increases the likelihood of monetary easing by the Bank of England. Furthermore, political instability introduces additional risk, potentially exacerbating the pound’s decline. These factors combined create a challenging environment for the currency.