Sterling Remains Under Pressure Despite Strong UK GDP

Sterling remained under pressure, trading below the $1.33 level and hovering near its lowest point since mid-October, as investors digested stronger-than-expected UK economic data, while the US dollar continued to draw support from expectations of further Federal Reserve tightening. Oil prices also stabilized, with Brent crude recovering momentum after recent steep declines. ONS data showed the UK economy grew by 0.7% in the third quarter, up from 0.5% in the previous quarter and in line with expectations. Annual growth accelerated to 1.9% from 1.4%, while September GDP rose 0.2%, exceeding forecasts. The resilient data strengthened expectations of further Bank of England tightening, with markets pricing in another rate hike before year-end and a further increase by March. In the US, stronger-than-expected inflation and hawkish Fed commentary reinforced expectations of a December rate hike, while raising the possibility of a more aggressive 50-basis-point increase.

GBPUSD decreased to 1.33, the lowest since October 2026. Over the past 4 weeks, British Pound US Dollar gained 0.06%, and in the last 12 months, it increased 0.55%.

Sterling extended its decline below the $1.33 level, touching its weakest point since mid-October, as the US dollar continued to benefit from expectations of further Federal Reserve tightening in December. The recent slide in oil prices also lost momentum, with Brent crude stabilizing following shipping attacks in the Strait of Hormuz. Meanwhile, hotter-than-expected US inflation data reinforced expectations of another Fed rate increase in December, while raising the possibility of a 50bp hike. However, expectations of further monetary tightening by the Bank of England helped limit sterling's losses. Deputy Governor Clare Lombardelli cautioned that consecutive rate increases remained a possibility, citing persistent wage pressures and the risk of second-round inflationary effects. Markets are increasingly pricing in another rate hike before year-end, followed by a further increase by March. Investors are now turning their attention to UK third-quarter GDP report due Thursday.