The Great Britain pound was the worst-performing major currency today, falling against all other most-traded rivals. The currency was heading to the biggest weekly loss in almost three weeks. The reason for the poor performance were extremely poor PMI figures, which made economists speculate that Britain’s economy will face a contraction in the fourth quarter of this year.
The IHS Markit/CIPS Flash UK Composite PMI dropped to 48.5 in November from 50.0 in October, touching the lowest level in 40 months. The Flash Manufacturing Output Index fell to 48.3 from 49.7. The Flash UK Services Business Activity Index declined to 48.6 from 50.0, also hitting the lowest level in 40 months. A reading below the 50.0 level indicates a contraction. Chris Williamson, Chief Business Economist at IHS Markit, commented on the survey results:
With an upcoming general election adding to Brexit-related uncertainty about the outlook, itâs no surprise to see UK businesses reporting falling output and orders in November. The decline signalled by the flash PMI follows stagnation in October and adds to what has been the surveyâs worst spell since the recession of 2008–9. The weak survey data puts the economy on course for a 0.2% drop in GDP in the fourth quarter, and also pushes the PMI further into territory that would normally be associated with the Bank of England adding more stimulus to the economy.
Currently, investors are cautious, preferring a wait-and-see approach before the outcome of the general election on December 12 becomes clear.
GBP/USD dropped from 1.2905 to 1.2833 as of 19:48 GMT today. EUR/GBP rose from 0.8566 to 0.8585, and its daily maximum was at 0.8605. GBP/JPY declined from 140.17 to 139.40.
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