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Forex - Sterling Drops as UK Growth Slows Sharply on Brexit Worries

11/02/2019 10:04:44 Forex

The British pound fell to the lows of the day on Monday after data showing that Britain’s economy slowed sharply in the final three months of 2018 amid concerns about the impact of Brexit.

GBP/USD was down 0.36% to 1.2899 by 05:03 AM ET (10:03 AM GMT) from around 1.2931 earlier.

The Office for National Statistics reported that the quarterly rate of growth slowed to 0.2% in the three months to December from 0.6% in the previous quarter. This was below forecasts of 0.3% and slightly weaker than the Bank of England estimated last week.

"GDP slowed in the last three months of the year with the manufacturing of cars and steel products seeing steep falls and construction also declining," ONS statistician Rob Kent-Smith said.

For 2018 as a whole, growth dropped to its lowest since 2012 at 1.4%, from 1.8% in 2017.

Exports were hit by global weakness and consumers and businesses grew increasingly concerned about the lack of a plan for when Britain is due to leave the European Union on March 29.

Last week the BoE cut its forecast for growth this year to 1.2%, which would be the weakest since the 2009 recession.

In December alone, the economy contracted by 0.4%, the largest drop since March 2016.

With less than seven weeks before the Brexit deadline, British Prime Minister Theresa May has failed to win parliament's backing for the withdrawal agreement she agreed with Brussels.

The euro rose to the day’s highs against sterling, with EUR/GBP adding on 0.21% to trade at 0.8761.

-- Reuters contributed to this report

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