LONDON (Reuters) - Sterling held at around a one-week low against the dollar on Friday, set for a weekly decline of 1.2%, as markets digested data showing Britain's economy failed to grow in the third quarter, though this was slightly above expectations.
The pound was last up a fraction on the day at $1.2231 little changed compared to before the GDP data was released.
Those numbers showed a 0% change in gross domestic product in the July-September period compared with a forecast for a 0.1% fall in a Reuters poll of economists, which many analysts said would likely represent the start of a recession.
"The scale of outperformance is unlikely to prompt much change in market pricing (for the interest rate outlook)" MUFG analysts said in a morning note.
"The market likely to consolidate into next week when we have the key CPI data."
Changes in expectations of when and how quickly different central bank start cutting interest rates next year is a major consideration for currency markets at present.
Markets are currently pricing in around 40 basis points of Bank of England rate cuts by September, less than for the U.S. Federal Reserve or the European Central Bank.
BoE chief economist Huw Pill drew attention on Monday by saying that pricing which currently points to a first rate cut to Bank Rate in August 2024 - "doesn't seem totally unreasonable, at least to me."
Those comments - unusual as most central bank policy makers are avoiding talking about rate cuts - contributed to the pound's 1.2% decline against the dollar this week.
Pill said on Thursday it was essential interest rates stay at their current level in order to tame inflation.
A rise in the greenback has also been a major factor in moves in the sterling/dollar pair - known as cable - and the dollar rose on Thursday after U.S. Federal Reserve officials including Fed Chair Jerome Powell said they were still not sure that interest rates are high enough.
But the British currency has also dropped against the euro, which has gained 0.7% on the pound this week, its biggest weekly gain since mid September.
The European common currency was last at 87.32 pence, little changed against the pound on Friday.