Skelter flat against Dollar, up against euro despite slower growth

Skelter flat against Dollar, up against euro despite slower growth

LONDON, December 22, Reuters -- Sterling steadied against the dollar and moved up against the euro on Wednesday, despite official data showing Britain's economy grew more slowly than previously thought before the Omicron variant surge seen in recent weeks.

In the third quarter between July and September, gross domestic product grew by 1.1%, a decrease from the estimate of 1.3%, according to official data released on Wednesday.

The economy's 5.4% bounce back in the second quarter was offset by the fact that many coronaviruses restrictions were lifted.

The rise in COVID 19 cases has hurt hospitality, leisure and retail businesses, and the government has said it can't rule out further restrictions after Christmas.

The pound was flat against the dollar at $1.32650.

The pound has lost some momentum since the Bank of England hiked its interest rate hike last week, making Britain the first G 7 country to raise rates since the start of the epidemic.

We believe that the UK rate market appears to be well priced at the current juncture for four BoE hikes next year, according to currency analysts at MUFG.

It is a high hurdle for the pound to strengthen, as a hawkish repricing of BoE expectations in the near-term is yet to be seen, especially since the worst of the new Omicron COVID wave is yet to be seen. Currency markets were muted on Wednesday, as volatility subsided in thin trading ahead of the holidays and after a flurry of central bank moves last week.

The sterling was up 0.1% against the euro, to 84.95 pence per euro.