By Max Clarke
UK Q3 GDP unexpectedly revised down
* Sterling falls against a basket of currencies
* Revision is “really disappointing”
The UK’s third quarter growth figure was unexpectedly revised down today, causing sterling to fall against a basket of currencies. The Office for National Statistics said that GDP grew 0.7 percent in the third quarter of 2010, down from the 0.8 percent previously estimated. On the year, growth was revised down to 2.7% from 2.8 percent.
The pound fell 0.23% against the euro to 1.1758 and tumbled 0.22% against the US dollar to $1.5447.
The Office for National Statistics blamed weaker outturns for production industries, construction and business services and finances on the unexpected revision.
Mark Bolsom, Head of the UK Trading Desk at Travelex Global Business Payments commented, “This is really disappointing news. The growth figure in the third quarter gave sterling a massive boost and bolstered trade confidence as well. The revision has taken the shine off the data and markets will be disappointed that UK growth is not as robust as it initially seemed.
“It’s a bad end to the year for sterling, as I expect growth to slow sharply next year as spending cuts and tax hikes start to bite.”
Minutes from the Bank of England’s MPC December policy meeting released this morning offered sterling little solace as it revealed another three-way split with member Adam Posen pushing his case for more quantitative easing. Andrew Sentence continued to favour an interest rate hike while the rest of the committee felt that current risks to both growth and inflation remain finely balanced and therefore prefer to keep policy unchanged for now.