Pound: Strong Growth, Little Lift

Britain’s economy grew 0.7% in the third quarter, in line with forecasts and its fastest pace in about two and a half years, the Office for National Statistics said. Services rose 0.9%, and computer programming and consultancy grew 4.4%. The ONS said there was “widespread strength in industries which may be related to artificial intelligence,” Reuters reported. Business investment rose only 0.4%. The Bank of England now expects 1.6% growth this year, above the Office for Budget Responsibility’s 1.2% forecast, Reuters said.

“The GDP numbers were good news … they show you there’s good momentum in AI roll-out and services in the UK economy,” said Kenneth Broux, FX and rates strategist at Societe Generale. Even so, the figures had little immediate impact on sterling, which was down 0.06% at $1.3271, Reuters reported. In my view, strong growth would normally lift a currency, but the dollar’s widening rate advantage is outweighing it for now.