The British pound has experienced a sharp drop as a reaction to the deteriorating UK PMI flash readings for August, which showed a decline in both the manufacturing and services sectors. The GBP/USD pair fell below the 1.27 level to a new low around 1.2675, while GBP/JPY plummeted from around 185 to approximately 184.24. Even against the euro, the pound’s previous strength has reversed, and it’s now trending in the direction of pound weakening. The yield on the 10-year UK government bond has decreased by 12 basis points to 4.52%.
The August UK Services PMI dropped to 48.7 (compared to the previous reading of 51.0), falling below the neutral point for economic sentiment and reaching its lowest level since January of this year. The Manufacturing PMI also reached a record low of 42.5 (compared to the previous reading of 45.3).
The pound’s sharp decline has led to a significant appreciation of the Japanese yen. Today’s market movement is expected to be greatly influenced by the PMI data, so keep an eye on the US PMI at 22:45 GMT today as well.