BRUSSELS (dpa-AFX) - The British pound weakened against other major currencies in the European session on Thursday, as the U.K. economy expanded slightly less than expected in November after two consecutive contractions.
In addition, the GBP was under pressure to decline as the yield on the U.K. 10-year gilt fell to 4.73%, reversing multi-decade highs, following official data that revealed a surprise decline in headline U.K. inflation, which raised anticipation of rate reduction by the Bank of England (BoE).
Data from the Office for National Statistics showed that U.K. gross domestic product grew 0.1 percent on a monthly basis in November, following an unrevised fall of 0.1 percent in October. GDP was expected to grow 0.2 percent.
Data showed that the services sector was the largest contributor to the growth with output rising 0.1 percent. This follows a 0.1 percent fall in October.
The decline in industrial production softened to 0.4 percent from 0.6 percent. Within in this, manufacturing was down 0.3 percent on month compared to a 0.6 percent decline in October.
At the same time, construction grew 0.4 percent, partially offsetting the 0.3 percent decrease in October.
Another report from the ONS showed that the visible trade gap was largely unchanged in November. The visible trade deficit totaled GBP 19.31 billion compared to a GBP 19.33 billion shortfall in October.
The surplus on trade in services increased to GBP 14.55 billion from GBP 14.31 billion. As a result, the total trade gap declined to GBP 4.75 billion from GBP 5.01 billion in the previous month.
Trading later in the day may be impacted by the release of U.S. reports on weekly jobless claims and retail sales.
In the European trading today, the pound fell to 0.8438 against the euro, 1.2201 against the U.S. dollar and 1.1126 against the Swiss franc, from early highs of 0.8408, 1.2248 and 1.1170, respectively. If the pound extends its downtrend, it is likely to find support around 0.85 against the euro, 1.20 against the greenback and 1.07 against the franc.
Against the yen, the pound edged down to 190.46 from an early high of 190.94. The pound fell earlier to a 1-1/2-month low of 189.83 against the yen. The pound may test support near the 186.00 region.
Looking ahead, Eurostat is slated to issue euro area foreign trade data for November at 5:00 am ET in the European session. The trade surplus is forecast to rise to EUR 11.8 billion in November from EUR 6.8 billion in October.
At 7:30 am ET, the European Central Bank is scheduled to issue the account of the monetary policy meeting of the Governing Council held on December 11 and 12.
In the New York session, Canada housing starts for December, U.S. retail sales for December, export and import prices for December, weekly jobless claims, U.S. Philadelphia Fed manufacturing index for January, Canada new motor vehicle sales data for November, U.S. business inventories for November and U.S. NAHB housing market index for January are slated for release.
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