Finance
Sterling ticks higher against dollar as economy slows less than expected
Published by Global Banking & Finance Review®
Posted on August 14, 2025
2 min readLast updated: January 22, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on August 14, 2025
2 min readLast updated: January 22, 2026
The pound rose against the dollar as UK GDP figures showed a slower economic slowdown than expected, influencing market expectations for interest rates.
LONDON (Reuters) -The pound rose to a fresh three-week high against the dollar on Thursday even as the greenback advanced against other major currencies, after UK GDP figures for July showed the economy slowing less than expected in the second quarter.
At 0937 GMT, the pound was 0.1% higher at $1.135875, sitting at a three-week high against the dollar. Meanwhile, the dollar rose against the euro and Swiss franc.
Against the euro, sterling rose 0.22% to 86.01 pence.
Official figures published on Thursday showed Britain's economy slowed less than expected between April and June after a strong start to the year, despite the shock of U.S. import tariffs and a weaker jobs market, offering help to finance minister Rachel Reeves in meeting her budget goals.
Francesco Pesole, FX strategist at ING, said while the numbers were generally positive they matter more for gilts and for the government heading into the autumn budget.
"The BoE hasn't really looked at GDP numbers closely because they're volatile and backward-looking, and they're really looking much more closely at inflation and jobs."
UK labour data on Tuesday showed weakness in hiring but persistent wage growth, a headache for the Bank of England, which is faced with the tricky task of balancing a slowing economy and stubborn inflation.
The next batch of inflation figures is due on August 20 after last month's CPI figures for June showing UK inflation rising to 3.6% - its highest since January 2024.
"The fact that policymakers are pondering how to respond to the challenging combination of a rather weak real economy and persistent inflation has bolstered the pound," wrote Commerzbank analysts in a note.
"...these doubts reinforce the view that the BoE is not leaning towards a dovish stance."
Money markets expect the BoE to hold rates steady at 4.25% at its next meeting on September 18.
(Reporting by Lucy RaitanoEditing by Frances Kerry)
UK GDP figures for July showed the economy slowed less than expected, which contributed to the pound rising to a three-week high against the dollar.
The Bank of England is focusing more on inflation and jobs rather than GDP numbers, as they are considered volatile and backward-looking.
Money markets expect the Bank of England to hold rates steady at 4.25% at its next meeting on September 18.
The Bank of England is dealing with a slowing economy alongside persistent inflation, which complicates their policy decisions.
The CPI figures for June showed UK inflation rising to 3.6%, the highest since January 2024.
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