STERLING dropped to a 23-month low against the euro, with the single currency topping 92p, as fears of a no-deal Brexit continued to weigh heavily on the pound.
A Chartered Institute of Procurement and Supply survey showing an acceleration in services activity growth did little to dispel fears over UK economic weakness, with expansion of this key sector still very weak.
The euro touched a high of about 92.27p during yesterday’s session. At 5pm in London, the single currency was trading around 92.02p, up by 0.43p on its pre-weekend close.
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Sterling fell to $1.21 yesterday – a level it dipped below last week. It had, by5pm, managed to climb to $1.2165, up by 0.33 cents on its pre-weekend close in London but still within one cent of the 30-month lows to which it tumbled last week as financial markets digested tough talk on Brexit from new Prime Minister Boris Johnson and his Cabinet. The pound is far adrift of the near-$1.50 levels at which it traded on June 23, 2016, ahead of the European Union referendum result.
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CIPS’s services activity index rose from 50.2 to 51.4 on a seasonally adjusted basis – rising further above the level of 50 deemed to separate expansion from contraction.
However, CIPS noted the reading was “well below the trend recorded since the recovery from the global financial crisis began in the second half of 2009”. The average index reading over this period has been 54.4. The services sector survey followed reports from CIPS last week showing continued contraction in the manufacturing and construction sectors.
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Chris Williamson, chief business economist at CIPS survey compiler IHS Markit, said: “The PMI (purchasing managers’ index) surveys indicated that the UK economy stagnated in July, steadying after a contraction in June, but still signalling one of the worst performances since the height of the global financial crisis in 2009.”
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