Sterling edges down versus dollar after UK data

By Stefano Rebaudo

Jan 15 (Reuters) - Sterling slightly pared its fall against the dollar on Thursday after UK economic data showed the economy grew more strongly than expected in November, but failed to affect the policy rate outlook.

Traders priced in around 40 basis ?points (bps) of Bank of England rate cuts by September.

UK gross domestic product recorded the fastest ?growth since June, boosted by a return to full production at Jaguar ?Land Rover after a cyberattack which hit the carmaker and ?its suppliers.

"Despite the upside ?surprise, it is important to note that the data are by no means strong," said ?Kallum Pickering, chief economist at Peel Hunt.

"Economic ?activity in the UK is, at best, lukewarm, lumpy and remains constrained mostly by a lack of confidence in the policy ?decisions of the Labour government."

The ?pound was ?down 0.05% at $1.3443, while it was falling by around 0.10% before data.

The dollar rose as markets set aside concerns about the Federal ?Reserve's independence and shifted their focus to economic data.

"The big picture remains that the UK economy has lost momentum since the summer," said Andrew Wishart economist at Berenberg.

"We suspect that this soft patch will persist into 2026 amid ongoing job losses and fiscal consolidation," he added, arguing that this ?backdrop ?could bring down inflation and enable the BoE to cut rates by more than the market currently prices in.

Analysts said investors ?were turning to economic data as the boost from easing UK fiscal and political risks that has supported sterling since Finance Minister Rachel Reeves unveiled the November budget has faded.

The next round of UK CPI inflation data is not scheduled until January 21

The euro rose 0.15% to 86.54 pence.

Wednesday's release of China's full-year 2025 ?trade data underscored a sensitive issue for the UK: the potential dumping of Chinese goods originally intended for the U.S. market.

Chinese goods exports to the UK rose 7.8% year-on-year in 2025 ?and 8.4% to the EU.

(Reporting by Stefano Rebaudo; Editing by Bernadette Baum)