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Pound slides as UK posts worst contraction since 2012

Pound slides as UK posts worst contraction since 2012

The pound sterling dropped to new record lows versus the U.S dollar and euro after U.K. GDP data showed Britain’s economy reported its worst contraction since the fourth quarter of 2012.  

As 11:30 GMT the pound has fallen to a new low of $1.2062, the lowest level in 31 months, and lost 0.7 percent to 1.0771 against the euro, the lowest in two years.

Now, the British economy has added to the Brexit worries as investors now fear the U.K. economy could be on the brink of recession.

The data released by the Office for National Statistics (ONS) on Friday showed that the British economy contracted 0.2 percent in the second quarter, which is considered the worst performance in six years. 

On the annual basis, the British economy grew 1.2 percent in the second quarter of 2019, down from 1.8 percent in the first quarter. 

In the first half of this year, the GDP of Europe's second largest economy increased by about 0.5 percent.  

From April to June, service activity growth slowed to a three-year low of 0.1 percent, compared with an increase of about 1.4 percent in the first quarter. 

The pound has remained haunted by the Brexit uncertainty amidst the determination of U.K. Prime Minister Boris Johnson to leave the European Union on October 31 with or without a deal.  

There could be a snap election in the U.K., as Jeremy Corbyn may trigger a no-confidence vote when lawmakers return to Parliament in early September.

The dollar index, which measures the performance of major six currencies against the U.S dollar, fell 0.11 percent at 97.322, set for a weekly loss.

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