Britain is teetering on a sterling crisis after the pound slumped to a 37-year low against the dollar.
New official retail figures painted a bleak picture of the UK’s economy, leading to sterling dropping below 1.14 dollars for a couple of hours on Wednesday morning, the worst point since 1985.
The drop came after newly released 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 drop came on the 30th anniversary of Black Wednesday, when the UK had to withdraw from the European Exchange Rate Mechanism (ERM).
Commenting on the dip, Simon Nixon, chief leader writer for The Times, said Britain is now “at risk of a sterling crisis”, adding that there is “no evidence at all that (Liz) Truss and (Kwasi) Kwarteng understand the gravity of the situation”.