The British pound extended its losses as bad news continues to pour out of the UK.  Service sector PMI  fell to the lowest level since October 2001.

This is the first time in 7 years that there has been a contraction in service, manufacturing and construction sector PMI.  Back then, GDP growth slowed to 0.1 percent, the lowest level since the second quarter of 1992.  These numbers explain why the Bank of England has been so reluctant to raise interest rates.  They know that their economy is in bad shape and that the downturn is deepening.  We expect the UK labor market to fall into the same downward spiral as the US labor market.  Many of the jobs that have been cut in the financial sector have been worldwide and London will feel the same pains as the US.