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The Sterling has fallen to its lowest level since 1985, dropping 0.4% to $1.1371 against the dollar. The value of the pound against the dollar stayed close to its 37-year low and declined even further against the euro, falling to 87.77 pence.
- This comes in the wake of discouraging retail sales data from the UK that reveal a 1.6% decline in August. Experts declared that the country's economy is now in a recession and prices are rising five times as quickly as the central bank's 2% target. The value of the pound is falling every day.
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The Bank of England is therefore expected to implement the largest interest rate increase in 33 years on September 22 as a result of rising inflation and declining investor confidence in British assets, likely adopting a 50 basis point hike to 2.25%.
Why it matters
This year, despite the Bank of England raising interest rates, the currency was threatened by decades-high inflation and a growing oil problem. After postponing its policy meeting for a week due to the passing of Queen Elizabeth II, the bank will announce its next interest-rate decision on Thursday.
