October 26, 2017 / 11:39 AM / a year ago

UPDATE 1-Sterling dips from 9-day high as growth data euphoria subsides

(Updates prices, adds quote)

By Polina Ivanova

LONDON, Oct 26 (Reuters) - Sterling slid back from a nine-day high against the dollar on Thursday as uncertainty over whether the Bank of England will hike rates next week tempered earlier confidence over stronger-than-expected growth data.

Wednesday’s third quarter GDP figures showed the British economy growing at a faster pace than expected, in what may be a relief for policymakers weighing up whether to hike rates at its Nov. 2 meeting.

But the boost for sterling was short-lived.

The pound briefly touched a nine-day high against the dollar in early trading on Thursday before falling back. By 1120 GMT, the pound was down 0.3 percent against the dollar and the euro.

Though the market is still largely priced for a BoE hike next week, some analysts said that the drop reflected a return to caution among some investors in a day that brought a mixed bag of other economic data.

“It depends on which figures you look at to justify your ultimate underlying bias, and what we’re seeing right now is the markets saying they’re not too sure (about the hike)” said Craig Erlam, senior market analyst at OANDA.

“There’s still a big split at the BoE... there’s at least a few policymakers that are unsure,” Erlam added.

Figures from the British car industry on Thursday showed production falling by 4.1 percent in September from the same month a year earlier, a fifth decline in six months that adds to signs of faltering consumer and business confidence.

New retail sales data also showed the fastest drop in sales in October since early 2009.

However, other Thursday data showed strong growth in the number of homes British construction companies applied to build over the three months to the end of September.

Worries about the progress of Brexit negotiations also continued to weigh on the pound, analysts said, with confusion over the details of the government’s strategy adding to a climate of uncertainty.

Mixed messages from British Prime Minister Theresa May and Brexit minister David Davis on Wednesday over the timetable of Britain’s exit from the European Union led to a day of clarifications and breathed new life into political divisions over when British lawmakers would vote on a Brexit deal. (Reporting by Polina Ivanova; Editing by John Geddie and Toby Chopra)

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