Pound slides after data showed UK growth slowed in fourth quarter of 2014

On Tuesday the pound sterling slid lower against the greenback after official data indicated that economic growth slowed in the fourth quarter of 2014, although grew at the fastest annual rate since 2007. 

GBP/USD was at 1.5084 following the release of the data, off session highs of 1.5117.

The Office of National Statistics reported that Britain’s economy rose 0.5% in the final three months of 2014, slowing from 0.7% in the preceding quarter, and below forecasts of 0.6%. The economy expanded 2.7%, slightly below forecast of 2.8%, on a year-on-year basis. As a whole, British economy grew 2.6% in 2014 as a whole, up from annual growth of 1.7% in 2013.

Joe Grice, the ONS's chief economist said it was "too early to say" if this slowdown would persist.

"The dominant services sector remains buoyant while the contraction has taken place in industries like construction, mining and energy supply, which can be erratic," he said.

Services output grew by 0.8% in the three months to December, unchanged from the third quarter, but construction output contracted by 1.8%. Manufacturing output grew just 0.1%, the weakest growth since early 2013.

The data underlined expectations that the Bank of England will keep rates on hold for most of the coming year.

Sterling was lower against the euro, with EUR/GBP up 0.50% to 0.7489. The euro continued to be underpinned after initially falling on Monday as a result of the election victory of the anti-austerity Syriza party in Greece.

However, the common currency recovered from losses as the euro’s recent sharp drop prompted investors to take profits on bearish euro positions.