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A third consecutive month of contraction was recorded in Britain’s manufacturing sector, according to the latest purchasing managers’ index. The figure dropped from 48.4 to 45.4 points, far worse than a score of 48.6 that was expected.

The acceleration in the contraction of this sector sent GBP/USD significantly lower: cable was trading close to 1.57 before the publication and it is now at around 1.5630.

According to the recent GDP release, the economy in the UK squeezed by 0.7% in Q2. It was partially blamed on bad weather and the jubilee celebrations. This fresh forward looking figure relating to Q3 shows that the slump probably continued, and that Britain is likely to complete a full year of recession.

The calendar is very busy for the pound, with more PMIs and the rate decision. See the GBP/USD forecast for all the details.

Also in the euro-zone, manufacturing contraction is accelerating fast with the overall figure standing at 44 points and German manufacturing standing even lower.