LONDON, Dec 13 Reuters Britain39;s economy shrank in October, official data showed on Wednesday, raising the risk of a recession and testing the Bank of England39;s resolve to stick to its tough antiinflation line against cutting interest rates from their 15year high.

Gross domestic product GDP fell by 0.3 from September, the Office for National Statistics said, adding that exceptionally wet weather might have impacted the data.

Economists polled by Reuters had expected no change in GDP in October.

It was the first time since July that GDP had shrunk on a monthbymonth basis.

Sterling fell by about a third of a cent against the U.S. dollar and was weaker against the euro too.

Investors added to their bets on the BoE starting to cut interest rates in June 2024, and the yield on 10year British government bonds fell to its lowest since May.

However, the central bank is widely expected to keep Bank Rate at 5.25 on Thursday and signal once again that it is not close to cutting them as it tries to ensure that Britain39;s stillhigh inflation rate 4.6 at its most recent reading in October is brought under control.

Paul Dales, chief UK economist at Capital Economics, said the October data suggested Britain might be in a recession.

That may nudge the Bank of England a little closer to cutting interest rates, although when leaving rates at 5.25 tomorrow the Bank will probably push back against the idea of nearterm rate cuts, Dales said.

Elizabeth Martins, at HSBC, said…