Forex News: Pound Slides As U.K. Economy Shrinks

Pound Slides As U.K. Economy Shrinks

(RTTNews) - The British pound weakened against other major currencies in the European session on Friday, after the U.K. economy contracted for the second straight month in October.

Data from the Office for National Statistics showed that the U.K. Gross domestic product fell unexpectedly by 0.1 percent month-on-month in October, the same pace of drop as seen in September. GDP was forecast to grow 0.1 percent.

The monthly fall was driven by a 0.3 percent contraction in services and a 0.6 percent fall in construction. By contrast, industrial production grew 1.1 percent.

On an annual basis, GDP was up 1.1 percent in October, which was weaker than forecast of 1.4 percent.

In the three months to October, real GDP was down 0.1 percent, following a 0.1 percent expansion in the three months to September.

Another data from ONS showed that the visible trade deficit widened to GBP 22.5 billion in October from GBP 18.9 billion in September. The deficit was expected to rise moderately to GBP 19.1 billion.

The surplus on trade in services totaled GBP 17.7 billion compared to GBP 17.8 billion in the previous month.

Meanwhile, the European stocks traded higher, with banks rising on investor optimism that the U.S. Federal Reserve will deliver more interest-rate cuts in 2026.

In the European trading today, the pound fell to 9-day lows of 0.8775 against the euro and 1.0631 against the Swiss franc, from early highs of 0.8761 and 1.0651, respectively. If the pound extends its downtrend, it is likely to find support around 0.89 against the euro and 1.04 against the franc.

Against the U.S. dollar and the yen, the pound edged down to 1.3369 an 208.23 from early highs of 1.3400 and 208.73, respectively. The pound may test support near 1.31 against the greenback and 203.00 against the yen.

Looking ahead, Canada building permits and wholesale sales for October and U.S. Baker Hughes oil rig count data are slated for release in the New York session.

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