The pound made small advances on the dollar (GBPUSD=X) and euro (GBPEUR=X) on Tuesday morning amid signs of stagnant growth at the end of 2025 and as traders continue to watch the situation in the Middle East.
Sterling recouped some of the losses from Monday’s trade as the Office for National Statistics (ONS) confirmed an earlier estimate that growth stood at 0.1% in the fourth quarter compared with Q3.
Growth was caused by an increase of 1.2% in production, while the construction sector decreased by 2% and the services sector showed no growth, the ONS said.
GDP is estimated to have increased by 1.4% annually in 2025, revised up from 1.3%, following unrevised growth of 1.1% in 2024.
The latest release shows Brits curtailed spending, opting to save instead, as concerns about inflation percolate. The Household Saving Ratio increased in Q4 by 0.8 percentage points to 9.9%, caused by a rise in the contribution of non-pension saving, the ONS said.
The reading adds to a raft of data for the Bank of England and chancellor Rachel Reeves to assess. The government has received criticism for not taking growth seriously enough, and now climbing oil prices are a major cause for concern in terms of potential inflation.
In response to the latest figures, a Treasury spokesperson said: “In an uncertain world we have the right economic plan. The decisions we have taken have put us in a better position to protect the country’s finances and family finances from global instability.
“We were the fastest growing European economy in the G7 last year and now we’re going even further by using regional growth, AI and a closer relationship with the EU to get our economy growing.”
On the other side of the Atlantic, a Wall Street Journal report indicated that Donald Trump has told his aides he was willing to end the US military campaign against Iran, even if the Strait of Hormuz remained largely closed.
Sterling ticked up 0.1% against the dollar (GBPUSD=X) to just below the $1.32 mark. For March, sterling is on track for a 2.2% loss against the greenback.
The dollar index (DX-Y.NYB), meanwhile was almost flat.
The pound also gained 0.1% against the euro (GBPEUR=X), rising above the 1.15 mark. In the last month, the euro is up about 0.7% against the dollar.
Download the Yahoo Finance app, available for Apple and Android.