British Pound Softens as UK Economic Data Disappoints
The British pound (GBPUSD) fell to 1.33 against the US dollar, the lowest since December 2025, as the UK economy posted zero growth in January, according to the statistics office.
Over the past 4 weeks, the British Pound to US Dollar has lost 2.77%, and over the last 12 months, it has increased by 2.49%.
Sterling fell in the week as investors reacted to disappointing UK economic data and to growing geopolitical tensions, which strengthened the US dollar.
Oil prices held above $100 a barrel, and stocks tumbled worldwide as investors braced for prolonged economic pain from the conflict in the Middle East.
Latest data showed that the UK economy unexpectedly flatlined in January, stoking concerns over growth amid the global energy price shock triggered by the US-Israel war on Iran.
Figures from the Office for National Statistics (ONS) showed 0% growth in gross domestic product (GDP), down from an increase of 0.1% in December, as the economy failed to recover from uncertainty surrounding the chancellor Rachel Reeves’s autumn budget.
Falling significantly short of City predictions of 0.2% growth, the figures came as the UK and other countries faced a potentially severe economic hit, with the Middle East conflict driving up oil and gas prices and pushing up living costs.
The pound fell against the US dollar after the figures were released, and government borrowing costs rose.
In a fresh blow to the government’s growth ambitions after a challenging start to the year, output in the service sector flatlined amid falls in recruitment activity and the hospitality sector.
Unemployment in the UK has risen to the highest level in five years in recent months, with businesses complaining that employer tax increases and a rising “national living wage” are hitting jobs. Hiring has fallen most in sectors such as hospitality and retail.
The ONS said the fall in employment activities was the largest negative contribution from a single industry to monthly GDP.
The next largest was accommodation and food service activities, with food and beverage services falling by 2.7% as fewer people ate out in restaurants, pubs and cafes.
The production sector – which includes manufacturing, mining, and energy generation – fell by 0.1% on the month, while the construction industry grew by 0.2%.
Despite the weak growth outlook, rising inflation risks mean the Bank of England is now expected to keep interest rates on hold for longer, with the possibility of further tightening. Nigerian Eurobonds, US Treasury Yields Diverge as Appetite Shifts
