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Sterling slips after record UK GDP fails to impress

06/11/2021 | 07:14am EDT
A British Pound banknote is seen in front of displayed stock graph in this illustration

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv

LONDON, June 11 (Reuters) - The pound edged lower and was on track for the second consecutive weekly loss versus the dollar with analysts saying data showing Britain's recovery from the pandemic sped up in April slightly undershot market expectations.

Britain's GDP was a record 27.6% higher than a year earlier when the virus was rampant. But economic output remained 3.7% below its level in February 2020, before the pandemic led to lockdown measures.

Against the dollar, sterling was down 0.1% to $1.4163 at 1108 GMT, after falling to a one-month low of $1.4071 on Thursday. It was 0.1% higher also versus the euro at 85.76 pence, at a one week high.

"UK GDP data release this morning, while strong, did not quite meet market expectations. Also, reports that the re-opening of the economy could be delayed beyond June 21 should limit enthusiasm for GBP versus the euro," said Jane Foley, Head of FX Strategy at Rabobank.

England was set to fully lift lockdown restrictions on June 21, helped by a swift vaccine roll-out that has brightened Britain's economic outlook. But with the Delta variant of COVID-19 first detected in India spreading fast, Prime Minister Boris Johnson is expected to decide on Monday whether to delay the reopening.

Sterling was under pressure this week after Britain and the European Union failed to agree on solutions to post-Brexit trade problems in Northern Ireland.

It won back a little ground on Thursday as investors expected the Federal Reserve to keep its policy unchanged even after data showed U.S. consumer prices climbed; while the European Central Bank maintained an elevated flow of stimulus as expected.

Sterling has also found some support from U.S. President Joe Biden's key messages to Britain in his first meeting with Johnson, Rabobank's Foley also said.

They "were more about the special relationship between the U.S. and the UK and less about issues related to the N. Ireland protocol," she said.

Biden and Johnson met in Cornwall, southwest England, before the start of the G7 Summit on Friday.

(Reporting by Joice Alves; Editing by Giles Elgood and Emelia Sithole-Matarise)

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / EURO (AUD/EUR) -0.20% 0.63113 Delayed Quote.0.31%
BRITISH POUND / EURO (GBP/EUR) -0.21% 1.16682 Delayed Quote.4.01%
BRITISH POUND / US DOLLAR (GBP/USD) -0.35% 1.3875 Delayed Quote.1.04%
CANADIAN DOLLAR / EURO (CAD/EUR) 0.06% 0.679117 Delayed Quote.5.14%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.08% 0.8069 Delayed Quote.2.30%
EURO / BRITISH POUND (EUR/GBP) 0.17% 0.85695 Delayed Quote.-3.84%
EURO / US DOLLAR (EUR/USD) -0.18% 1.189 Delayed Quote.-2.48%
IMPRESS HOLDINGS, INC. -2.49% 196 End-of-day quote.16.67%
INDIAN RUPEE / EURO (INR/EUR) -0.05% 0.011315 Delayed Quote.1.37%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.35% 0.013443 Delayed Quote.-1.49%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -0.11% 0.6979 Delayed Quote.-3.26%
US DOLLAR / EURO (USD/EUR) 0.19% 0.840923 Delayed Quote.2.90%
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