Unexpected Shrink in UK Economy Stirs Pound

The British pound fell as data revealed a 0.1% contraction in the UK economy for October, deviating from the expected 0.1% growth. This unforeseen economic shrinkage may increase the likelihood of earlier rate cuts by the Bank of England in the coming year.

The pound declined on Friday after official data revealed a surprising contraction in the British economy for October.

This 0.1% shrinkage, contrary to the 0.1% growth forecasted by economists in a Reuters poll, has prompted traders to speculate about potential speedier rate cuts by the Bank of England next year.

Sterling initially dipped by up to 0.3% before settling at a 0.24% decrease, valuing it at $1.2642.

(With inputs from agencies.)