Sterling tumbled across the board on Friday, leaving it on track for its biggest fall against the euro in six months, after data revealed a shock third-quarter contraction in the UK economy. British gross domestic product shrank by 0.4 percent between July and September, way below analysts' forecasts for 0.2 percent growth, making the current recession the longest on record with six successive quarters of contraction.
The data sent the pound, which earlier hit a six-week high against the dollar, tumbling by around three cents. "What's happened today will push the pound back into a bear trend that will probably persist for some time," said Steve Barrow, head of G10 currency research at Standard Bank.
Under its QE programme, the Bank of England has since March been buying assets to inject liquidity into the economy, contributing to sterling weakness Sterling slid to a session low of $1.6335 against the dollar, taking it below its 100-day moving average, a key technical support level which traders said stood at $1.6362.
Sterling also headed for its biggest one-day percentage fall against the euro since late April. It was last down 1.5 percent at 91.76 pence. These falls pushed sterling's trade-weighted index down to 79.1 from 80.6 earlier, its biggest fall in a month. At 1442 GMT, sterling was down 1.6 percent at $1.6355. It also fell around 1-1/2 percent against the yen to a low of 150.01 yen.
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