US GDP today exceeded expectations after growing by 3.9 per cent during the third quarter as the Federal Reserve prepared to announce whether it will cut the interest rate against a weakening dollar.

The rate of GDP outstripped expectations of 3.0 per cent growth, suggesting that the US economy is weathering current global difficulties brought on by the sub-prime mortgage crisis and a lack of liquidity in the financial markets.

GDP was boosted by increases in exports, consumer spending and business investment, making up for a further fall in home construction.

The stronger-than-expected figure has been released just before the US Fed announces whether, as forecast, it will cut the interest by a quarter point to 4.5 per cent after reducing borrowing by half a point in September to 4.75 per cent.

The dollar remained weak against sterling, at $2.07 – the highest point the pound has reached against the greenback since the Thatcher era in 1981.

While third quarter GDP was strong, analysts expect growth will slow in the fourth quarter with some observers expecting an increase of just 1.5 per cent.

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