Forex - Sterling remains lower after UK growth slows

© Reuters. Sterling lower as UK growth slows in third quarter

Investing.com - The pound remained lower against the dollar on Tuesday after data showing that economic growth in the U.K. slowed at a faster than expected rate in the third quarter.

GBP/USD was last at 1.5328, off 0.16% for the day from around 1.5329 earlier.

The Office for National Statistics said gross domestic product expanded 0.5% in the three months to September, slowing from 0.7% in the second quarter and worse than economists' forecasts of 0.6% growth.

The service sector continued to be the fastest growing part of the U.K. economy, with an expansion of 0.7%, but both the building and manufacturing sectors suffered contractions.

Construction sector output contracted by 2.2%, while manufacturing output contracted by 0.3% the ONS said.

The economy grew 2.3% on a year-over-year basis, below forecasts of 2.4% after growth of 2.4% in the second quarter.

The soft data indicated that a period of rapid economic growth could be coming to an end and underlined expectations that the Bank of England will keep interest rates on hold for longer.

Sterling was little changed against the euro following the report, with EUR/GBP at 0.7205.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 96.93 ahead of the start of the Federal Reserve’s two-day policy meeting beginning later in the session.

The dollar remained on the back foot after a disappointing report on U.S. home sales prompted investors to trim back expectations for a rate hike before the years end.

The Fed was widely expected to keep rates on hold until early 2016 but investors were awaiting the banks rate statement for fresh indications on the timing of an initial rate hike.