The pound fell against the euro after a report showed the U.K. economy expanded at a slower rate than previously estimated in the third quarter. Sterling weakened versus 11 of its 16 most-actively traded counterparts as data from the Office for National Statistics showed Britain’s gross domestic product rose 0.7 percent in the three months to September. That compares with an initial estimate of 0.8 percent announced in October and which was double the pace forecast by economists. Second-quarter growth was revised to 1.1 percent from 1.2 percent. “The GDP data knocked the pound,” said Jane Foley, a senior foreign-exchange strategist at Rabobank International in London. “The data will feed fears that growth will slow in the fourth quarter, and it just takes away some of the shine that had been put onto sterling by that stronger release back in October.” The pound depreciated 0.3 percent to 85.21 pence per euro as of 10:50 a.m. in London. The U.K. currency was little changed at $1.5475, from $1.5470 yesterday. Sterling has lost 0.7 percent in the past week, according to Bloomberg Correlation-Weighted Currency Indexes, which track a basket of 10 developed-country currencies. Since the end of 2009, Britain’s currency has lost 6.1 percent, compared with a 10.3 percent decline by the euro and a 1.4 percent loss by the dollar. Minutes of the Bank of England’s December meeting showed policy makers remained split in their decision to keep the benchmark interest rate at a record low 0.5 percent and the asset-purchase program unchanged at 200 billion pounds. Business Investment Separate ONS reports today showed business investment rose 3.1 percent in the third quarter from the previous three months, while the current account deficit widened to 9.6 billion pounds from 5.2 billion pounds. As a percentage of GDP, the deficit was 2.6 percent. Government bonds were little changed, with the 10-year gilt yield dropping one basis point to 3.49 percent. The two-year yield was at 1.20 percent. Gilts returned 6.6 percent this year, according to indexes compiled by the European Federation of Financial Analysts Societies and Bloomberg. Treasuries gained 5.8 percent and German debt, the euro-area’s benchmark securities, returned 5.9 percent, the EFFAS indexes show. To contact the reporters on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net; Emma Charlton in London at echarlton1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

Source