Investing.com - The pound fell against the dollar on Monday, nearing Friday’s 14-month lows as data showing that Japan’s economy unexpectedly fell back into recession spooked markets, boosting safe haven demand.
GBP/USD was down 0.29% to 1.5625, within striking distance of Friday’s 14-month lows of 1.5591.
Data on Monday showed that Japan’s gross domestic product contracted by an annualized 1.6% in the third quarter, following a 7.3% decline in the previous quarter. Economists had forecast a 2.3% increase.
The unexpectedly weak data added to gloom over the outlook for the global economy.
Japanese Prime Minister Shinzo Abe was expected to postpone a planned sales tax increase due to come into effect next year after a sales tax hike in April of this year acted as a drag on growth.
The prime minister was also expected to call for snap elections which could take place as soon as next month.
The pound came under additional selling pressure after British Prime Minister David Cameron warned that the global economy could be heading towards a fresh crisis.
In a newspaper article published on Sunday the prime minister said the euro zone is on the brink of a fresh recession and emerging markets are slowing, while geopolitical tensions and the Ebola epidemic also threaten stability.
“Red warning lights are flashing on the dashboard of the global economy”, he said.
Sterling weakened across the board last week after the Bank of England warned that inflation is likely to continue to slow, prompting investors to push back expectations for a U.K. rate hike to the autumn of next year.
Elsewhere, the pound was close to one month lows against the euro, with EUR/GBP trading at 0.7989.