The pound continues to strengthen, hitting a 2.1/2 month high at 1.18 0. UK GDP fell less than expected in the third quarter. $ remains under pressure for Fed tapering. . Sterling is up for a second day in a row against a beaten US dollar, hitting a fresh two-week high of 1.18 0. On the weekly chart, the pair has a .8% rally, its best weekly performance in the last two years. UK GDP CONTRACTS LESS THAN EXPECTED IN THIRD QUARTER UK preliminary GDP contracted 0.2% in the third quarter, well above the market consensus of -0.5% after a 0.2% increase in the previous quarter. The British economy slowed to 2. % for the year from . %, still better than the 2.1% expected by market analysts. While the figures confirm the Bank of England’s predictions that the country is entering a prolonged recession, markets seem to welcome the data, allowing the pair to continue its sharp two-day rally. On the other hand, the US dollar extended its selloff with US inflation numbers seen on Thursday acting as a tailwind for the pair. According to the US Bureau of Labor Statistics, the US consumer price index slowed to 7.7 percent year over year in October, well below market expectations of 8 percent and September’s 8.2 percent. These data suggest that inflationary pressures may decrease, which raised expectations of a sharp move by the US Federal Reserve in the coming months. That weakened demand in the United States and boosted global stock markets. In a very thin US calendar, a preliminary Michigan consumer sentiment index predicts a stronger than expected decline in November. Rising prices and worries about rising interest rates hurt consumer confidence.