The pound had started the day pretty settled after Thursday’s drop on the back of senior aides of Prime Minister Boris Johnson saying they would hold a parliamentary election in the days after Brexit if lawmakers sink the government with a no-confidence vote.
Analysts say the election talk will weigh on the pound today because it is growing increasingly likely that Johnson will face a vote of no confidence soon after Sept. 3, when parliament returns from its summer recess.
However, the pound had dropped off since 9:30 am when the UK economic figures were released.
Britain’s economy shrank for the first time since 2012 in the second quarter, an unexpectedly severe hangover from a pre-Brexit stockpiling boost in early 2019.
Gross domestic product fell at a quarterly rate of 0.2% in the three months to June, below all forecasts in a poll of economists that had pointed to a flat reading.
Year-on-year economic growth slid to 1.2% from 1.8% in the first quarter, Britain’s Office for National Statistics said, its weakest since the start of 2018.
The world economy has also slowed due largely to a trade conflict between the United States and China.