October 25, 2017 / 8:14 AM / a year ago

Sterling steadies ahead of UK GDP data

LONDON (Reuters) - The British pound steadied on Wednesday as investors eyed upcoming GDP figures, one of the last major data points ahead of a Bank of England policy meeting next week at which interest rates could increase for the first time in a decade.

Pound coins are seen in the photo illustration taken in Manchester, Britain September 6, 2017. REUTERS/Phil Noble/Illustration

The numbers are due to be released at 0830 GMT and are predicted to show that the British economy grew by 0.3 percent during the third quarter compared with the previous three months.

A weaker-than-forecast result could see investors scale back their bets that the BoE will raise rates next week - a view supported by 46 of 64 economists in a Reuters poll on Tuesday.[nL8N1MY1LF]

“Given the outlook for the economy, given the uncertainty, people will be looking for any signs of...weakness and anything that possibly adds to the question marks over what the BoE might do at the meeting next week,” said Simon Derrick, currency analyst at BNY Mellon.

Recent comments by BoE rate-setters, interpreted by the market as striking a note of caution with respect to rates, have added to the climate of uncertainty. The Bank’s deputy governor said on Monday that a rate rise in November remained an “open question”.

“The Bank runs the risk of eroding its credibility further with the mixed messages currently emanating from its various policymakers,” Michael Hewson, analyst at CMC Markets, wrote in a note to clients on Wednesday.

Sterling was trading flat at $1.3128, just above a two-week low of $1.3087 hit on Friday.

It was also flat against the euro at 89.55 pence.

Concerns about the progress of Brexit talks have also weighed on the pound, with businesses and investors keen to see a framework in place soon for the two-year transitional period after Britain formally leaves the European Union in March 2019.

British Prime Minister Theresa May’s spokesperson said on Tuesday that the government believes it can agree the details of a transitional agreement soon.

Reporting by Polina Ivanova; editing by Jemima Kelly and Ralph Boulton

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