UK Economy Stalls in Third Quarter, Pound Weakens

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UK Economy Stalls in Third Quarter, Pound Weakens
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Revised figures from the UK's Office for National Statistics show that the country's GDP remained stagnant in the third quarter, dealing another blow to the British economy. The pound weakened against the US dollar following the news.

Revised figures from the U.K.’s Office for National Statistics on Monday showed GDP did not grow at all in the three months to September.The British pound was trading lower against the U.S. dollar on Monday morning. Initial data from the ONS last month, said U.K. GDP grew at 0.1% during that period. However, the final data released on Monday showed 0% GDP growth from the previous quarter.

Monday's figures deal another economic blow to Britain, after a series of weak data prints have dampened sentiment and raised questions about the newly elected Labour government's fiscal strategy. Data from the ONS showed the U.K. economy had unexpectedly contracted by 0.1% in October. It was the second consecutive monthly GDP decline for the country, following a fall of 0.1% Looking ahead, Paul Dales, chief U.K. economist at Capital Economics, said he expects the British economy to have also stagnated in the final quarter of 2024 — but his view was not entirely pessimistic. 'Overall, these data suggest that after a bumper first half of the year, the economy ground to a halt in the second half of the year due to a combination of the lingering drag from higher interest rates, weaker overseas demand and some concerns over the policies in the budget,' he said in a note Monday. 'Our hunch is that 2025 will be a better year for the economy than 2024. But more recent data suggest the economy doesn't have much momentum as the year comes to a close.' that U.K. inflation had risen to 2.6% in November, marking the second back-to-back month of an upward tick in prices. While markets had been expecting no rate change at Thursday's Monetary Policy Committee (MPC) meeting — there was surprise that three MPC members voted to reduce rates (a Reuters poll had forecast only one member would vote to cut).four rate cuts could be possible next year, traders are divided over when the Bank of England will resume lowering interest rate

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