The flash estimate showed the UK has likely expanded by an annual rate of 1 per cent, although this was the weakest rate of annual growth seen since 2010 when the economy was dragging itself out of recession. Quarter-on-quarter, the economy expanded by 0.3 percent – less than the 0.4 percent forecast. Commenting on this, Tej Parikh, an economist at the Institute of Directors noted: “Narrowly avoiding a recession is nothing to celebrate. The UK economy has been in stop-start mode all year, with growth punctuated by the various Brexit deadlines.”
The pound was also bolstered as Brexit Party leader Nigel Farage said that his party would not contest seats won by the Conservative Party in 2017.
This decision could help the Conservatives secure a majority in December.
Meanwhile, the US dollar was left under pressure as traders looked for the end to the ongoing US-China trade tensions.
Last week saw US President Donald Trump refute claims that both sides would be issuing rollbacks on tariffs, with his comments undermining previous optimism and the US dollar.
Commenting on the ongoing tensions, MUFG currency analyst, Lee Hardman said: “Market participants have become more cautious over the potential positive impact for global growth from a partial US-China trade deal following comments from President Trump.
“Nevertheless, market participants are likely to remain optimistic that the US and China are moving closer to finalising a partial trade deal by the end of this year.”
Looking ahead to Tuesday, the pound could be left under pressure following the release of the UK’s employment and wage growth data.
While low levels of unemployment and solid wage growth have helped the support the British economy, economists now expect further data to reveal the largest decline in employment in around eight years, which could weigh on Sterling.
If data reveals Brexit pessimism and global trade tensions have caused unemployment to rise and wage growth to disappoint in September, GBP/USD could slide.