Post #15487

Pound Slips as UK Growth Contracts The pound slipped after UK data showed the economy unexpectedly contracted into October. GDP fell 0.1% over the three months and in October alone — a miss versus expectations for flat growth. That said, sterling is still on track for a weekly gain, supported mainly by broad dollar selling as markets price in further Fed easing next year. The bigger question now is whether this slowdown is structural or just a pre-budget dip in activity. The late-November tax-raising budget adds another layer of uncertainty, and clarity won’t come until more data rolls in. All eyes turn to the Bank of England next week. Markets are pricing a ~90% chance of a rate cut after last month’s tight 5–4 hold. Next week’s CPI and labor data will be critical. They’ll drive meaningful volatility in both the pound and gilts. Some are even warning of a stagflation risk — slowing growth with still-sticky inflation — which would be the worst possible setup for the UK economy. - Alan