Pound hits lowest since 1985 over cost-of-living crisis

Bloomberg

The pound slid to its weakest level in almost four decades as mounting evidence of a UK recession combines with an ascendant dollar.
Sterling fell as much as 1% to $1.1351, the lowest since 1985. The latest hit was data showing UK retail sales fell at the sharpest pace in eight months in August, as a worsening cost-of-living crisis and plunging confidence forced consumers to cut back on spending.
“Today’s retail sales data just released were terrible,” said MUFG analyst Derek Halpenny. “The sterling-dollar exchange rate has further to fall in circumstances of
increased financial market volatility.”
The UK currency has fallen around 16% this year. While that has mostly been a story of broad dollar strength, with almost all major currencies succumbing to the greenback, it also reflects the prospect of a UK recession and political uncertainty with a new government. Household budgets are being squeezed from inflation near a 40-year high.
Those headwinds are starting to be reflected against other currencies. Sterling hit its weakest since February 2021 against the euro Friday.