Pound at one-week low as GDP data show slow recovery

Sterling fell to a one-week low against the dollar on Tuesday after new data showed Britain's economy picked up more slowly than economists had forecast. Gross domestic product rose by 1.8% in May after falling by a record 20.8% in April, the Office for National Statistics said, well below forecasts in a Reuters poll.

Sterling fell to a one-week low against the dollar on Tuesday after new data showed Britain's economy picked up more slowly than economists had forecast.

Gross domestic product rose by 1.8% in May after falling by a record 20.8% in April, the Office for National Statistics said, well below forecasts in a Reuters poll. "If there is to be v-shaped recovery, the UK economy is right at the bottom," Ulas Akincilar, head of trading at the online trading platform Infinox, told clients. "At this stage, May's modest rebound in growth is best seen as a dead cat bounce, or simply a pause in the pain."

The pound fell 0.25% to $1.2519 versus the dollar and was at a one-week low against the euro at 90.53 pence . Investors also await more news on Britain's negotiations with the European Union on concluding a trade deal for the post-Brexit period. Britain left the bloc on January 31, with a one-year transition period to iron out a future relationship.

"My feeling is the market is not fully pricing in the likelihood of a hard Brexit," said Colin Asher at Mizuho. "There has been very little progress on negotiations and even if there is a deal, there's not much time to put a lot in it."

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