Sterling nears $1.33 after UK GDP data but falls 2% in September

  • Sterling recovered toward $1.33 after stronger UK GDP data and Andy Burnham's comments on closer EU ties.
  • The pound fell 2% against the dollar during September after reaching about $1.32 earlier in the week.
  • Revised second-quarter UK GDP growth was 0.5%, while Bank of England data showed household unsecured lending at its fastest annual pace since at least 1993.

Sterling recovered toward $1.33 at the end of September after reaching a three-month low near $1.32 earlier in the week, supported by stronger-than-expected UK GDP data and Prime Minister Andy Burnham's comments on closer ties with the European Union. Burnham opened the possibility of the UK rejoining the EU after the next general election and planned to outline options later this year, while his first conference speech as prime minister addressed trade-offs involving social care and utility control. Despite the recovery, the pound fell 2% against the dollar during September as markets expected the Bank of England to tighten monetary policy more slowly than the Federal Reserve. Revised data showed second-quarter UK GDP growth of 0.5%, up from 0.4%. On Sept. 29, sterling fell 0.2% to $1.3226 as higher U.S. bond yields and oil prices supported the dollar, although it gained against the euro, which fell 0.1% to 85.72 pence. Bank of England officials gave mixed rate signals, while household unsecured lending recorded its fastest annual growth since at least 1993.

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