Pound Drops Before First GDP Data Covering Era After Brexit Voteby
Sterling has been driven more by politics in recent days
Data to show growth more than halved after referendum
The pound declined against most of its developed-country peers before the release of output data that will provide the first evidence on how the economy performed since the nation voted in June to leave the European Union.
After a period when the currency was whipsawed by statements from lawmakers as politicians debated prioritizing the widest access to the EU’s single market versus controlling immigration, third-quarter gross domestic product may take the economy back to center stage. On Wednesday, sterling gained the most in more than a week versus the dollar, a day after Bank of England Governor Mark Carney made comments that were interpreted as meaning further monetary easing was less likely.
“The new data should confirm a significant deceleration of growth in the U.K. in the third quarter,” said Roberto Mialich, a senior foreign-exchange strategist at UniCredit SpA in Milan, who sees the pound dropping to $1.20 by year-end. “A significantly weaker number will resume selling pressure on the pound. A positive surprise might offer some relief to sterling.”
The pound declined 0.3 percent to $1.2210 as of 8:39 a.m. London time, after jumping 0.5 percent on Wednesday. It has tumbled 18 percent since Britain voted to leave the EU on June 23, the biggest slide among 31 major currencies tracked by Bloomberg. Sterling weakened 0.3 percent to 89.37 pence per euro.
The U.K. economy expanded 0.3 percent in the three months through September, the slowest pace in a year and down from a 0.7 percent growth in the previous quarter, according to the median of analyst estimates in a Bloomberg survey. The government has said it will start the formal process of leaving the world’s largest trading bloc by the end of March 2017.