Sterling is underperforming after weak retail sales data and traded near 1.1350, the lowest since 1985. Economists at BBH note that the GBP/USD pair could plummet to the all-time low at 1.0520.
Sterling pounded on anniversary of Black Wednesday
“Headline sales fell -1.6% MoM vs. -0.5% expected and a revised 0.4% (was 0.3%) in July, while sales ex-auto fuel also fell -1.6% MoM vs. 0.4% in July. As a result, the YoY rates fell to -5.4% and -5.0%, respectively. The data confirm what we all know already, and that is the economy is sliding into recession. How long and how deep this downturn will remain a great source of debate.”
“We would be remiss if we did not mention that today is the anniversary of Black Wednesday. Thirty years ago, sterling was unceremoniously ejected from the Exchange Rate Mechanism. Cable is marking the occasion by trading at its weakest level since 1985 near 1.1350. There is literally nothing in the charts until the February 1985 all-time low near 1.0520.”
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