The pound fell on Friday following the release of UK GDP figures pointing to a weaker expansion in the second quarter than initially thought.
In the three months to June of this year the UK economy grew at just 1.5%, the weakest growth rate since 2013.
What will be of concern to market participants is the slowdown was particularly pronounced in the services sector, a huge part of the UK economy.
Head of Gross Domestic Product at the ONS, Darren Morgan said of the reading:
“There was a notable slowdown in growth in the first half of 2017. The often buoyant services sector was the only area to grow in the second quarter, mainly due to increases in computer programming and retail.
“Household spending growth continued to slow in the second quarter. However, revised figures show business investment grew more strongly than previously estimated. Meanwhile, the UK’s deficit with the rest of the world was little changed in the second quarter.
“Today’s figures include several improvements to the way we measure the UK economy, including better estimates of self-employed income and interest received from corporate bonds. These improvements have the impact of increasing the saving ratio and current account deficit over a number of years.”
GBP/USD fell over 40 points in the immediate reaction to the announcement and continued to trade lower throughout Friday morning. GBP/USD is down over 250 points since touching intraday highs of 1.3659 20th September.
Despite the recent drop, Sterling is over 10% stronger against the dollar since post-brexit lows helped largely by hawkish suggestions from the Bank of England that the MPC will soon vote for a rate hike.