The UK economy contracted more severely than expected in July, pushing the pound lower.
Most recently, the Office for National Statistics (ONS) reported UK gross domestic product fell by 0.5% month-on-month in July compared to expectations for a contraction of 0.2%.
It was the biggest decline recorded so far this year after recording 0.5% growth in June.
According to the ONS data, all the main sectors of the economy namely services, manufacturing and construction showed a decline in July.
This is a sign that the UK economy is weakening, which may be worse than expected by the Bank of England (BOE).
The market is now awaiting another economic indicator, namely UK inflation data to be published next week (Wednesday) ahead of the BOE's policy meeting on Thursday.
Meanwhile, the UK's chief economist at Capital Economics described the fall in the latest GDP data as indicating that a recession in the country may have begun.
The effect on the currency can be seen in the lower drop of the pound to the price level of 1.2445 against the US dollar.
