According to a report on the website of the Financial Times on September 16, the exchange rate of the pound once morest the US dollar fell to its lowest level since 1985 on the 16th.
On the 16th, the exchange rate of the pound once morest the US dollar once fell by 1% to 1 pound to 1.135 US dollars, which was the first time in nearly 40 years that it broke the 1 pound to 1.14 US dollars mark. Later in New York trading, the pound climbed back above $1.14 per pound, but is still down nearly 16% for the year.
The move speaks to the dollar’s general strength this year and reflects particular concerns regarding the state of the U.K. economy.
On the same day, the pound fell regarding 0.5% once morest the euro to 1.141 euros per pound, and has fallen regarding 4% for the year.
This followed a string of weaker-than-expected retail sales data in Britain, fueling fears that the country is regarding to slip into a prolonged recession.
UK retail sales fell sharply in August as British consumers struggled to cope with soaring prices and high energy costs, according to data released by the Office for National Statistics on the 16th. UK purchases of goods fell 1.6% in the July-August period, reversing a modest increase in the previous month.
The drop was larger than the 0.5% contraction forecast by economists interviewed by Archyde.com, and the biggest drop since the UK lifted hotel virus restrictions in July 2021.
Olivia Cross, an economist at Capital Economics, said the data suggested “the downward momentum is accelerating” and further reinforced her view that “the UK economy is already in recession”.
Rising prices and the cost of living are affecting sales, the ONS said. Sales have continued to trend downward since the UK economy reopened in the summer of 2021.
The figures underscore the impact of high inflation on consumers and the broader economy. The UK government this month announced a £150bn energy support package that is expected to limit the blow from the recent surge in gas prices but not eliminate the risk of a recession.
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Victoria Scholler, head of investment at Interactive Investments, said the decline in the pound once morest the dollar and the euro on the 16th showed that “it has nothing to do with the movement of the dollar … in fact, it is traders selling the pound because everyone is concerned regarding the British economy. The outlook and investment profile are negative.”
To combat inflation, the Bank of England is expected to raise interest rates for the seventh time in a row at its meeting next week. Inflation in the UK is now nearly five times its 2% target.