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LONDON (Reuters) – Sterling weakened on Thursday after news that Britain’s economy grew by a slower-than-expected 1.1% between August and September, a pace that leaves the UK lagging other rich nations in its attempt to recover from the coronavirus pandemic.

FILE PHOTO: Some of the artwork details are seen on a large scale sample of the new twenty pound note during the launch event at the Turner Contemporary gallery in Margate, Britain, October 10, 2019. Leon Neal/Pool via REUTERS

The impact of the number was all the heavier because the period measured was before the latest restrictions on businesses took effect.

GDP figures showed that in the July-September quarter, the economy grew by a record 15.5% from the previous three months.

Still, this number marginally missed expectations polled by Reuters as well, as economists were looking for 15.8% growth.

“The weaker than expected print will put the brakes on the recent sterling rally and will provide a reality check for the market and will highlight lingering headwinds for the pound in the form of ongoing Brexit negotiations and the growing economic impact of the pandemic,” said Sam Cooper, Vice President of Market Risk Solutions at Silicon Valley Bank.

Britain reached a bleak milestone in its battle with the coronavirus on Wednesday as the official death toll passed 50,000, casting a shadow on news about the effectiveness of a potential vaccine announced on Monday.

Finance minister Rishi Sunak said steps to restrict the spread of COVID-19 were likely to have slowed economic growth since September.

The pound was down by 0.5% against the dollar at $1.3152 and by 0.8% against the euro, last trading at 89.78 pence.

Traders in the British currency have been dealing with torrid times, as uncertainty and volatility have grown on the back of rising coronavirus cases and a lack of clarity about whether Britain will exit the European Union single market in January with a trade deal in hand.

An EU-UK trade pact is unlikely to come together this week and negotiations might go into the next, an Irish minister said on Wednesday, confirming a Reuters report that the sides were now set to miss their mid-November deadline.

Irish Prime Minister Micheal Martin said on Thursday the entire world was watching Brexit negotiations, including U.S. President-elect Joe Biden, who was looking forward to a Brexit trade deal being clinched.

Meanwhile, the top trade representatives for Brazil and the UK held a videoconference on Wednesday to discuss strengthening trade and investment links, including a possible post-Brexit bilateral trade deal.

Market makers were deliberating whether the Bank of England would lower interest rates into negative territory if the impact of coronavirus on the economy gets worse and Britain fails to sign a post-Brexit trade deal with the EU.

BoE Governor Andrew Bailey said that he didn’t have a “precise date in mind” when the findings of the BoE’s consultation with banks on negative rates would come out.

Neil Wilson, chief market analyst at Markets.com, wrote that this meant negative rates were “in the toolkit but he (Bailey) had got no plans to go down that way for now”.

“A vaccine cannot come soon enough for the British economy – and for those cyclical components of the market that rely on broad economic activity returning,” Wilson said.

Market participants are for now pricing in rates going below zero in the UK next June.

Reporting by Olga Cotaga; Editing by Kevin Liffey