Sterling fell to a one-week low on Friday and British stocks sold off after the UK economy unexpectedly contracted in the second quarter.
The pound fell to the day’s low of $1.2088 after the gross domestic product data was published, down 0.4% on the day, before recovering slightly.
Against the euro, the pound also fell and was last down 0.3% at 92.40 pence, not far from the two-year low of 92.65 pence it reached on Thursday.
British government bond yields fell with 10-year Gilts slipping one basis point after the data to 0.48% and five-year Gilts down almost two basis points at 0.336% .
London’s export-heavy blue-chip FTSE 100 index briefly pared its earlier losses as sterling slumped after the data.