Sterling nudges higher as economic data, political tensions dominate

By Sophie Kiderlin

LONDON, Feb 12 (Reuters) - The pound edged up against the dollar on Thursday even as data showed that the UK economy barely expanded in the last quarter of 2025 and markets took stock of Britain's simmering political crisis.

Sterling was last 0.1% higher against the dollar at $1.3639, with the greenback slightly weaker across the board. GBP=

The euro was steady against the pound at 87.08 pence, below the three-week high struck on Monday, when British Prime Minister Keir Starmer's position seemed to be on shaky ground. EURGBP=

Some tensions about Starmer's future appear to have eased, with the prime minister on Tuesday pledging never to walk away from his job.

Nevertheless, political strife has not created a positive backdrop for the pound, Nick Rees, head of macro research at Monex, said, adding that the story would likely continue to play out in the coming days.

"If we get the repeated stories about Keir Starmer's judgments that resurrects the commentary and the speculation about him potentially being replaced, ... that's still negative," Rees said, adding that the latest UK economic data added to the prime minister's difficulties.

Figures published on Thursday showed that Britain's economy eked out 0.1% growth in the last quarter of 2025, the same pace as in the previous three months and below expectations.

Sterling was little changed after the data.

Rees noted the figures were relatively old, and often volatile.

"So from our perspective, we don't think there's much signal to be taken from this as far as projecting forwards and how the UK economy is going to do in the early part of 2026. But the headlines that we expect to see today are 'the UK economy has grown less than expected,' and that's just another piece of bad news to the Prime Minister," he said.