London September 16 2022: Sterling marked the 30th anniversary of “Black Wednesday” by falling to a fresh 37-year low against the U.S. dollar on Friday, and a 19-month trough against the euro, after weaker-than-expected retail sales figures reinforced fears about Britain’s economy.
The pound fell more than 1% against the dollar to $1.1351, its lowest since 1985, and was last trading at $1.1404.
Most major currencies have been struggling against the dollar in recent months, and the greenback was given another leg-up this week after hotter-than-expected U.S. inflation caused markets to price in a further large rate hike from the Federal Reserve next week.
The pound has particularly struggled, however, and the euro rose to as high as 87.71 pence on Friday, its highest level since Feb 2021. It was last up 0.39% at 87.45 pence.
On Sept. 16 1992, Britain crashed out of the Exchange Rate Mechanism – a system designed to reduce currency fluctuations ahead of the launch of the euro – causing a sharp devaluation in the pound.
That day, now known as Black Wednesday, saw sterling fall 4.3% to finish the day at $1.778 , well above today’s level.
Friday’s drop followed data that showed retail sales volumes slipped 1.6% in monthly terms in August – the biggest fall since December 2021 and worse than all forecasts in a Reuters poll of economists that had pointed to a 0.5% fall.
This was just the latest bad news for the British economy, which faces slower economic growth and more persistent inflation than any other major economy next year, the International Monetary Fund forecasts.
