Sterling shot higher in European trading hours Tuesday as it emerged that the U.K. economy grew much faster than most market-watchers predicted, undermining the case for further monetary easing.
The pound jumped by 0.4% to $1.5870 against the dollar as the data showing a 0.8% expansion in the U.K. economy in the third quarter were released. Economists had expected to see a reading of 0.4%. The euro fell by a similar degree to 0.8788 against the pound.
The move represents a “nice pop” in sterling, said Daragh Maher, a currencies analyst at Credit Agricole in London. The case for further quantitative easing in the U.K.–a big drag on the pound of late–has been eroded by the figures, he said.
The pound was recently trading at $1.5866 against the dollar. The euro was at 0.8791 against the pound.
