The pound is cratering after new data showed the first signs of a post-Brexit crash in the British economy.
Earlier on Friday, Markit’s monthly composite PMI reading — which gives a picture of the state of Britain’s services and manufacturing sectors, and the economy as a whole — showed that activity in the UK fell to its lowest levels since the tail end of the global financial crisis in July.
Understandably this spooked investors, and sent the pound tumbling lower. Prior to the release at 9:30 a.m. BST (4:30 a.m. ET), sterling was higher by roughly 0.4% on the day, but as soon as the data emerged it fell off a cliff. An hour after the release, the pound is off 0.5% against the dollar to trade at $1.31 Its daily high was $1.3285
Here is how sterling looks (note the huge drop at 9:30):
Sterling took a hammering after the UK voted to leave the European Union, losing more than 12% of its value in a couple of trading sessions, and dropping down to the lowest level since 1985. While it has rallied a little since then — and last week enjoyed its biggest weekly rise since 2009 — sterling still remains almost 12% down from $1.4897, where it closed on the day before the referendum result.
Predictions from substantial portions of the markets suggest that in the medium term, it is expected that the pound will likely continue to fall against most major currencies, with predictions of the currency’s bottom ranging from $1.20 at Goldman Sachs, to $1.15 from Deutsche Bank, all the way to $1, a prediction made by former PIMCO executive Mohammed El-Erian.