The pound has hit a new 37-year low against the dollar as new official retail figures painted a bleak picture of the UK’s economy.
Sterling dropped below $1.14 for a couple of hours on Wednesday morning, pushing it below recent lows and taking it to its worst point since 1985.
The drop came after newly released UK retail figures showed a drop of 1.6 per cent in August, compared to the 0.5 per cent fall economists predicted.
“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,” said Francesco Pesole, a currency expert at ING.
“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 per cent against the dollar, buying a little over €1.14. It lost 0.3 per cent against the euro, also trading at a little over €1.14.
Sterling has been weak against the dollar for months, largely because of the strength of the US currency.
The euro has also been at multi-decade lows against the dollar.