Finance
Sterling edges down versus dollar after UK data
Published by Global Banking & Finance Review®
Posted on January 15, 2026
2 min readLast updated: January 19, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 15, 2026
2 min readLast updated: January 19, 2026
Sterling fell against the dollar despite strong UK growth data. Traders expect Bank of England rate cuts amid ongoing economic challenges.
By Stefano Rebaudo
Jan 15 (Reuters) - Sterling slightly pared its fall against the dollar on Thursday after UK economic data showed the economy grew more strongly than expected in November, but failed to affect the policy rate outlook.
Traders priced in around 40 basis points (bps) of Bank of England rate cuts by September.
UK gross domestic product recorded the fastest growth since June, boosted by a return to full production at Jaguar Land Rover after a cyberattack which hit the carmaker and its suppliers.
“Despite the upside surprise, it is important to note that the data are by no means strong,” said Kallum Pickering, chief economist at Peel Hunt.
“Economic activity in the UK is, at best, lukewarm, lumpy and remains constrained mostly by a lack of confidence in the policy decisions of the Labour government.”
The pound was down 0.05% at $1.3443, while it was falling by around 0.10% before data.
The dollar rose as markets set aside concerns about the Federal Reserve's independence and shifted their focus to economic data.
“The big picture remains that the UK economy has lost momentum since the summer,” said Andrew Wishart economist at Berenberg.
“We suspect that this soft patch will persist into 2026 amid ongoing job losses and fiscal consolidation,” he added, arguing that this backdrop could bring down inflation and enable the BoE to cut rates by more than the market currently prices in.
Analysts said investors were turning to economic data as the boost from easing UK fiscal and political risks that has supported sterling since Finance Minister Rachel Reeves unveiled the November budget has faded.
The next round of UK CPI inflation data is not scheduled until January 21
The euro rose 0.15% to 86.54 pence.
Wednesday’s release of China’s full-year 2025 trade data underscored a sensitive issue for the UK: the potential dumping of Chinese goods originally intended for the U.S. market.
Chinese goods exports to the UK rose 7.8% year-on-year in 2025 and 8.4% to the EU.
(Reporting by Stefano Rebaudo; Editing by Bernadette Baum)
Monetary policy involves the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic objectives like controlling inflation and stabilizing currency.
Foreign currency refers to any currency that is not the domestic currency of a country, used in international trade and investment.
Financial markets are platforms where buyers and sellers engage in the trade of assets such as stocks, bonds, currencies, and derivatives.
Economic growth is an increase in the production of goods and services in an economy over a period, typically measured by GDP.
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