The pound is cratering

A member of an expedition group stands on the edge of a newly formed crater on the Yamal Peninsula, northern Siberia November 9, 2014. A group of scientists and discoverers in November went on an expedition initiated by the Russian Centre of Arctic Exploration to research the crater after pilots captured it on video in July 2014 which attracted the attention of world public. Participants managed to descend down to about 16 metres (52.4 feet) and reached the frozen surface of the base of the crater with a lake at least 10 metres (32.8 feet) deep below, according to Vladimir Pushkarev, head of the Russian Centre of Arctic Exploration. Experts, including geologists and historians, have not come to a consensus about the origin of the funnel yet, Russian media report. Picture taken November 9.

REUTERS/Vladimir Pushkarev/Russian Centre of Arctic Exploration

The pound is cratering on Friday after new data showed the first signs of a post-Brexit crash in the British economy.

Markit's monthly composite PMI reading — which gives a picture of the state of Britain's economy — showed that activity fell to its lowest levels since the tail end of the global financial crisis in July.

This spooked understandably spooked investors and sent the pound tumbling. Prior to the data release at 9:30 a.m. BST (4:30 a.m. ET), sterling was higher by roughly 0.4% on the day, but as soon as the PMI figure was published the pound fell off a cliff, and it has continued to drop.

Just after 2:50 p.m. BST (9:50 a.m. ET) sterling is trading down by roughly 1.1% against the dollar at $1.3089. Its daily high was $1.3285 at around 9:15 a.m.

Here is how sterling looks (note the huge drop at 9:30):

sterling 3 july 22

REUTERS/Vladimir Pushkarev/Russian Centre of Arctic Exploration

Sterling took a hammering after the UK voted to leave the European Union, losing more than 12% of its value in a couple of trading sessions and dropping to its lowest level since 1985. While it has rallied a little since then — last week it enjoyed its biggest weekly rise since 2009 — sterling still remains almost 12% down from where it closed on the day before the referendum result, $1.4897.

Predictions from substantial portions of the markets suggest that in the medium term, the pound is expected to continue to fall against most major currencies. Predictions of the currency's bottom range from $1.20 at Goldman Sachs, to $1.15 from Deutsche Bank, and even all the way to $1, a prediction made by former PIMCO executive Mohammed El-Erian.

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See Also:

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