The Great Britain pound crashed today as the combination of negative macroeconomic indicators and continuing political turmoil in the United Kingdom was dragging the currency down. Currently, though, the sterling has managed to bounce, trimming its losses versus most rivals and even gaining on the very weak euro (though currently it is trading about flat versus the shared eurozone currency).
British Retail Consortium reported that like-for-like retail sales fell 0.5% in August from a year ago. Paul Martin, UK Retail Partner at KPMG, commented on the result:
August proved to be yet another incredibly disappointing month for retail, with like-for-like sales down 0.5% and total sales flat-lining at zero. Itâs clear that for much of the retail market, efforts are being focussed on preservation, not growth, in this adverse and uncertain climate.
The headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index slid to 45.0 in August from 45.3 in July. Being below the neutral 50.0 level, the indicator suggested that the construction sector was contracting with an accelerating pace. The report said:
August data pointed to a loss of momentum in the UK construction sector, led by the sharpest reduction in new work since March 2009.
Meanwhile, Britain’s political crisis continues. Pro-remain opposition plans to seize control of the House of Commons and pass legislation that will force the government to postpone the October 31 Brexit deadline by three months if no deal with the European Union is reached until that date. In response, Prime Minister Boris Johnson said that he will initiate a general election on October 14 if the bill passes.
GBP/USD was down from 1.2067 to 1.2031 as of 11:43 GMT today but rebounded from the daily low of 1.1958. GBP/JPY traded at about 127.61 after opening at 128.08 and falling to the session minimum of 126.67. At the same time, EUR/GBP was trading near the opening level of 0.9091.
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