Sterling's Slide Sparks Economic Anxiety

Sterling fell to a two-week low as UK GDP data showed a contraction, suggesting the Bank of England might cut rates soon. The economy shrank by 0.1%, driven by weak industrial and construction sectors. Analysts hint at potential tax hikes to balance public finances amid ongoing political and trade uncertainties.


Devdiscourse News Desk | Updated: 11-07-2025 16:00 IST | Created: 11-07-2025 16:00 IST
Sterling's Slide Sparks Economic Anxiety
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Sterling experienced a dip on Friday, reaching a two-week low, following data that indicated the UK economy contracted for a second consecutive month. This added pressure on the Bank of England to potentially lower borrowing costs in the near future.

The UK economy saw a 0.1% contraction, as reported by the Office for National Statistics, dragged down by lackluster performances in industrial and construction sectors. Economist James Smith from ING highlighted concerns emanating from the labor market, questioning its stability as growth falters.

The pound dropped by 0.26% against the U.S. dollar and 0.2% against the euro. Meanwhile, traders now see a 78.3% likelihood of a rate cut by the BoE, up from 64% earlier predictions. This economic strain coincides with political challenges, including potential tax increases to offset fiscal imbalances and heightened trade tensions globally.

(With inputs from agencies.)

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