UK Pound Plunges on Latest PMI Reading

Thanks to the Brexit vote, confidence in the UK economy is poised for big losses. The latest PMI reading — a special reading by Markit — indicates that things could be headed for trouble. Sterling is dropping dramatically on the news, losing ground to its major counterparts.

The latest PMI readings from Markit are in, and they indicate potential trouble ahead for the UK economy in the wake of the Brexit vote. The PMI for the services sector dropped to 47.4 in July, down from 52.3 in June. This is a fairly steep drop, and a low not seen for about seven years. Manufacturing PMI also dropped.
The survey indicates that confidence in the UK economy has dropped dramatically since citizens voted to leave the European Union. Concerns about what’s next for the United Kingdom are weighing on Forex traders and others.
Another concern is the fact that a weakening sterling will make imports more expensive for the United Kingdom, further causing problems for the economy. The Bank of England has been hoping to be able to reduce stimulus measures, but the Brexit issue changes things.
At 12:36 GMT GBP/USD is down to 1.3099 from the open at 1.3233. EUR/GBP is up to 0.8409 from the open at 0.8332. GBP/JPY is down to 139.52 from the open at 140.01.

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