Pound slumps to 37-year low against dollar after worse than expected retail figures
16 September 2022, 14:12
The pound has fallen to a new 37-year low against the US dollar after figures showed UK retail sales fell sharply last month.
The larger-than-expected drop in sales volumes of 1.6% prompted fresh concerns over the state of the economy as the cost of living crisis hits households.
Sales in across all retail sectors fell in August as households cut back in the face of rising prices with some analysts suggesting retail figures showed the UK is already in recession.
Sterling fell more than 1% against the dollar to $1.13, its lowest since 1985, following the release of the retail sales figures. A weak pound means Brits travelling overseas will find their spending money will not stretch as far.
This comes at a time when UK inflation, which is the rate at which prices rise, is running at a near 40-year high, despite slipping to 9.9% from July's 10.1%.
Francesco Pesole, a currency expert an ING, said: “This morning’s retail sales in the UK continued to show a deteriorating consumption picture in the UK, which emerged more from the continuation of a steady downtrend from last summer rather than the single grim data point in a rather volatile series.
“This has been the last important piece of data before the Bank of England meeting on Thursday and has hit the pound this morning.”
The pound regained some ground in the early afternoon but was still trading down around 0.5% against the dollar, buying a little over 1.14 dollars.
It lost 0.3% against the euro, also trading at a little over 1.14 euros.
The drop came on the 30th anniversary of Black Wednesday, when the UK had to withdraw from the European Exchange Rate Mechanism (ERM).
