The Great Britain pound slumped on Monday, dragged down by the mix of surprisingly poor manufacturing data and yet more Brexit headlines that suggested the United Kingdom is likely to leave the European Union without a trade deal.
The seasonally adjusted IHS Markit/CIPS Manufacturing Purchasing Managers’ Index dropped to 47.4 in August from 48.0 in July, reaching the lowest level since July 2012. It was a surprise to experts as they were expecting the index to stay unchanged. The reading below 50.0 means that the sector was in decline.
British Prime Minister Boris Johnson signaled that he is going to initiate a general election on October 14 if MPs will table a bill designed to prevent a no-deal Brexit. With no trade deal with the EU in sight and no unity among British politicians, it looks almost impossible for Britain to avoid hard Brexit. And investors do not relish such a prospect.
GBP/USD traded at 1.2060 as of 00:08 GMT on Tuesday after tanking from 1.2140 to 1.0267 on Monday. EUR/GBP was at 0.9085 following the rally from 0.9030 to 0.9089. GBP/JPY was little changed after dropping from 128.71 to 128.09 yesterday.
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