The British pound dropped below $1.14 for the first time since 1985 as a combination of dollar strength and recession warnings weighed on the U.K.’s currency . Sterling fell as low as $1.135 at 8:50 a.m.
London time, marking a fresh 37-year low before rising slightly to $1.146 by late afternoon. It followed the publication of figures showing a 1.6% fall in August retail sales, which analysts at ING said showed a “deteriorating consumption picture in the UK.”
European markets traded lower amid growth fears, expectations for further rate hikes and continued volatility in the energy market weighed on stocks. The pan-European Stoxx 600 closed 1.6% lower, with all sectors and major bourses in negative territory.
Many sectors were down around 1.5%, including food and beverages and media. Auto stocks fell 1% despite data showing a rise in new car sales in the European Union for the first time in 13 months.
It comes off the back of three days of losses for European stocks, which have particularly dented energy and technology shares. However, banking stocks gained on Thursday after Morgan Stanley analysts upgraded the sector.
The World Bank on Thursday warned of a global recession in 2023 and said central bank hiking may not be enough to bring down inflation.