Investing.com – The pound rose to the day’s highs on Wednesday after data showing that UK economic growth picked up the third quarter was seen as raising the chances of an interest rate hike by the Bank of England next month.
GBP/USD was up 0.31% at 1.3176 by 04.50 AM ET (08:50 AM GMT) from around 1.3122 ahead of the report.
The Office for National Statistics reported that gross domestic product grew by 0.4% in the three months to September, up from 0.3% in the previous quarter. Economists had expected grow to remain steady at 0.3%.
The UK economy expanded 1.5% on a year-over-year basis, matching the previous quarter’s growth and above forecasts for an expansion of 1.4%.
Service sector output provided the bulk of the growth the ONS said, expanding by 0.4% during the quarter.
The manufacturing sector also returned to growth, with output rising by 1.0%, but construction activity contracted by 0.7% on the quarter.
The pick-up in growth was likely to cement expectations that the BoE will raise interest rates next month, but growth of 0.4% is still well below the UK’s long term growth rate.
The euro fell to the day’s lows against the pound following the report, with EUR/GBP down 0.38% to 0.8922 from around 0.8966 earlier.