HomeFinancial MarketsPound Slumps to 12-Week Low Amid Falling Business Activity

Pound Slumps to 12-Week Low Amid Falling Business Activity

A slump in economic activity in the United Kingdom has seen the sterling slump to a 12-week low. The UK S&P Global/CIPS composite Purchasing Managers’ Index (PMI) fell from 50.8 in July to 48.6 in August, indicating a contraction in economic activity. The services sector PMI stood at 49.5, just below the midway point separating growth from contraction.

Such developments have strengthened bets that the Bank of England is set to implement a 25 basis point interest rate hike later this month. The central bank has implemented 14 straight rate hikes, bringing its key rate to 5.25%.

The pound declined by 0.5% against the US dollar to $1.2565; a slight rise from the $1.2529 realized earlier in the day. The latter figure is the pound’s weakest showing since June 13. The dollar index, which measures the greenback against six other currencies including the pound, rose 0.4% to 104.61.

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