The British pound fell on Friday to a 37-year low against the US dollar, and to a 17-month low against the euro, after weaker-than-expected retail sales figures heightened concerns about the health of the UK economy.
The pound fell more than 1% against the dollar to 1.1351, its lowest level since 1985, and its decline accelerated once it crossed a 37-year low last week.
The euro rose to 87.66 pence, the highest since February 2021, and was last up 0.39% at 97.52 pence.
Retail sales volumes fell 1.6 percent month-on-month in August, the Office for National Statistics said on Friday, the biggest drop since December 2021 and worse than all forecasts in a Archyde.com poll of economists that pointed to a 0.5 percent drop.
“The grinding backdrop of everything that is happening is weighing on sterling, as the UK runs these massive external deficits and the risks surrounding the new prime minister’s policies add to this,” said John Hardy, head of FX strategy at Saxo Bank.
The new British leader announced, Liz TerraceLast week, it announced a two-year cap on energy bills to cushion the economic shock of the war in Ukraine, with measures likely to cost the country more than 100 billion pounds ($115 billion).
British Chancellor of the Exchequer Kwasi Quarting is due to issue a financial statement this month to explain how the plan will be funded, and is also expected to spell out how the tax cuts promised by Truss during her campaign to lead the Conservative Party will be delivered.