Pound bounces back against dollar despite UK recession fears

The pound soared to its highest level against the dollar for three months despite further signs that the UK is already in recession.

Sterling climbed by as much as two cents to $1.2080, its strongest since August 17. It also rose by a cent to €1.1643 against the euro. 

That was despite a business survey showing that the economy shrank for a fourth month in a row in November.

It puts Britain on course for a 0.4 per cent decline in GDP for the fourth quarter which – after a 0.2 per cent contraction in the third quarter – would mean that Britain is in recession.

Chris Williamson, chief business economist at S&P Global, which conducted the survey, said business sentiment ‘remains among the gloomiest seen over the past quarter century’ amid the cost of living crisis, war in Ukraine and political chaos.

Yet the reading of 48.3 in the purchasing managers’ index (PMI) survey – where the 50 mark separates growth from decline – was a little better than expected.